Saudi finance ministry appoints 5 local banks as early dealers in government securities

Saudi Arabia’s Finance Ministry signed an agreement on Thursday to appoint five local banks namely; Alinma Bank, Bank Aljazira, National Commercial Bank (NCB), Samba Financial Group and Saudi British Bank (SABB), as primary dealers in local government securities, the ministry said.

The move aims to expand the investors’ base in the primary market to secure the Kingdom’s domestic debt financing requirements. It also aims to support the development of the secondary market by increasing the liquidity of local government securities and advise the Debt Management Office (DMO) on developing the Kingdom’s debt markets, in-line with Vision 2030, Mohammed Al-Jadaan, finance minister, said upon signing the agreement.

The deal reflects the objectives of the Financial Sector Development Program 2020 through enabling financial institutions to support the growth of the private sector in developing an advanced financial market capable of attracting fintech companies, the minister added.

Fahad Al-Saif, DMO’s president, said that this agreement represents part of a clear strategy in the short-, medium- and long-term to support the state's public finances efficiently, which is an essential component part of the office’s function.

The issuance requests will be submitted to the DMO through the initial clients who have been appointed. The office will announce the issuance through these dealers at a later time, after taking their views and arranging the necessary procedures to ensure the appropriate participation of all investors wishing to subscribe. The initial designated dealers will then receive offers from investors.

As for the local government securities in the secondary market, the primary dealers will take the role of market makers in cooperation with their authorized persons in accordance with the regulations of the Capital Market Authority (CMA).