World's largest bank by market cap already has branches in Abu Dhabi and Qatar
Saudi Arabia has decided to let Industrial and Commercial Bank of China, the largest Chinese commercial bank, open a branch in the country, a sign of growing economic ties between the world's top oil exporter and second-biggest oil consumer, local media said.
"The cabinet approved the licence... to open a branch in the kingdom and authorised the finance minister to decide on any subsequent request to open other branches of the bank," the Saudi Press Agency quoted Information Minister Abdulaziz al-Khoja as saying on Tuesday.
The report only gave a version of the bank's name in Arabic but it was identified as ICBC by local media on Wednesday. A public relations company representing the bank in the Gulf said it would be unable to confirm the report until ICBC had been officially contacted by the Saudi Arabian Monetary Authority (SAMA), the central bank.
SAMA lists only 11 foreign banks on its website that are already licenced to operate in the kingdom.
State-owned ICBC is the world's largest bank by stock market capitalisation. It has branches in Abu Dhabi and Qatar, as well as a subsidiary in Dubai. It has also been seeking a licence to operate in Kuwait; the country's state news agency KUNA reported earlier this year that its central bank had given "initial approval" for ICBC to set up a branch there.
ICBC's Middle East operations made a 2011 pre-tax profit of US$32m, more than double the US$15m it recorded in the previous year, the bank said in March. Total assets jumped 146 percent to US$3.06bn.
The bank has moved to benefit from China's increased trade with Middle East countries and a growing appetite for renminbi-denominated business. In addition to Chinese imports of Saudi oil, the countries have set up a string of joint ventures in refining and petrochemicals.
Saudi Arabian Oil Co (Saudi Aramco) and China Petrochemical Corp (Sinopec) have a refining joint venture in the Chinese province of Fujian and plans for another in western Saudi Arabia. Saudi Basic Industries Corp has a world-scale ethylene plant with Sinopec in China's Tianjin, which the companies this year agreed to expand to produce polycarbonates.
Chinese building firms have meanwhile made headway in winning large engineering, procurement and construction contracts from Saudi Arabia in a market once dominated by Western, Japanese and South Korean companies. China's Sepco III Electric Power Construction Corp was awarded multi-billion dollar contracts to build two power plants in 2009 and 2010.
In January, Chinese Premier Wen Jiabao visited Riyadh for talks with King Abdullah and the late Crown Prince Nayef, with trade high on the agenda.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.