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The Saudi Central Bank placed about 50 billion riyals ($13 billion) as time deposits with commercial lenders, according to people familiar with the matter, seeking to ease the worst liquidity crunch in over a decade.
The intervention started just before the US Federal Reserve’s interest-rate hike this month, and consisted of money provided to banks at a discount to the three-month Saudi Interbank Offered Rate, or Saibor, used as a benchmark to price loans, the people said, asking not to be identified as the information is private.
The central bank, also known as SAMA, didn’t immediately respond to a request for comment.
Liquidity conditions as measured by Saibor are the tightest since late 2008, when the price of crude collapsed below $40 a barrel. The extent of the funding stress among Saudi banks has little precedent outside periods when oil prices were crashing or global crises like the credit crunch of 2008-2009.
This year, by contrast, Saudi Arabia is on track to run its first budget surplus in about a decade after seeing revenues soar on the back of a rally in oil prices above $100 and rising production.
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