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[DUBAI] Saudi Arabia central bank Governor Ahmed Alkholifey said a cash crunch that squeezed commercial lenders last year is over and that he's open to more foreign banks operating in the biggest Arab economy.
The Saudi Arabian Monetary Authority sees no need for further steps to boost banking liquidity, Mr Alkholifey said in an interview with Bloomberg Television in Davos on Thursday, his first with an international news organization since taking office last year. The central bank has injected billions of riyals into the banking system and introduced more repurchase agreements.
"We had too intervene," Mr Alkholifey said. The central bank is now comfortable with current liquidity levels "and I don't think we need to intervene anymore," he said. A key measure of domestic borrowing costs has dropped after Saudi Arabia sold the biggest ever bond from an emerging market in October and cut weekly domestic debt issuance. Interbank rates have fallen 15 per cent since peaking at 2.386 in October, the highest level since the 2008 financial crisis.
Saudi Arabia is navigating through the biggest economic shakeup in its history as authorities seek to counter the impact of low oil prices and cut the reliance on hydrocarbon exports.
The governor said the central bank is reviewing one licensing application from a regional lender and is open to requests from other foreign banks. "We have an open policy," he said. "We accept applications for sure. As we speak we have one application in the pipeline." The central bank has recently approved a request by Bank of Tokyo-Mitsubishi to operate in the kingdom. "Usually we look at the financial position of that bank" and "the value added to the sector and the economy," Mr Alkholifey said.