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HSBC Bank Middle East is setting up a joint venture investment bank in Saudi Arabia and is eyeing Kuwait and Libya as part of its regional expansion strategy, the bank’s chief has declared.

The bank’s business is growing steadily year on year although the revenues from this region account for just five per cent of total revenues.

“We have applied for a licence to set up an investment bank in Saudi Arabia. It will be set up as a joint venture between HSBC and Saudi British Bank,” says Stephen Green, chairman of HSBC Bank Middle East. “It is in the process of approval.”

Green says the Middle East is a growth area for the bank but it will grow organically. New markets planned for entry include Kuwait, Libya and Iraq. “We are looking at ways of entering Kuwait although nothing is firm yet. HSBC is interested in Libya as the bank had business there and it is a way of supporting our Middle East operations. “We are closely looking at the situation in Iraq, we are in active dialogue but as yet there are no operations.”

HSBC will conduct Islamic banking business through the bank’s Islamic window and the bank has no plans immediately to set up a separate entity for Islamic banking in Saudi Arabia, he adds.

In the last financial year, the bank earned a net profit of US$220mn from its Middle East operations, contributing some 5% to its worldwide revenues.
“We do see growth prospects in the region with the economies developing rapidly due to high oil prices. There is a lot of liquidity, there is immense project finance activity, the equity markets are increasing and capital markets are becoming sophisticated,” he says, adding that the UAE and Saudi Arabia are the bank’s best markets in this region.