#SaudiArabia Banks Facing $43 Billion Tab Get a Rates Breather for Now - Bloomberg video

Saudi Arabia Banks Facing $43 Billion Tab Get a Rates Breather for Now - Bloomberg

Saudi Arabia’s cash injections into banks brought immediate liquidity relief for an industry still in the grip of a funding challenge.

The interest rate banks charge one another for loans had its biggest two-decline since the height of the global pandemic in March 2020 after policy makers acted to address the worst funding crunch in over a decade. The Saudi Central Bank, known as SAMA, in recent days placed about $13 billion as time deposits with commercial lenders, according to people familiar with the matter.

But under the assumption that Saudi banks will expand credit by nearly 14% this year while deposits grow far slower, Bloomberg Intelligence estimates lenders will still need to raise about 160 billion riyals ($43 billion) to finance bigger loan books.

“Banks still must diversify funding,” said Edmond Christou, senior analyst at Bloomberg Intelligence. “SAMA’s aid just delays a fix.”

The first signs of a turnaround have already emerged, however, with liquidity conditions loosening sharply since Friday’s close. The three-month Saudi Interbank Offered Rate, or Saibor, slipped to 2.9281% on Monday, a decline of nearly 37 basis points in two days.