Scores of multinationals have heeded Riyadh’s ultimatum to establish regional headquarters in Saudi Arabia or face losing out on lucrative government contracts, but leading banks have been conspicuous by their absence.
PepsiCo, Boeing, PwC and Unilever are among the 350 global companies that complied with the edict and obtained regional headquarters licenses, according to Saudi Arabia’s investment ministry, while others such as Boeing have applied for them. But the likes of Citibank, Deutsche Bank, Goldman Sachs and HSBC are big names that have yet to announce they are doing so.
Large financial services companies often operate their Middle East businesses under a broader geographical area that includes Europe and Africa, and bankers have told the Financial Times that several lenders are uncomfortable with the regulatory implications of setting up a regional headquarters in the Gulf kingdom.
“It’s not only about whether you want to put people in Saudi Arabia, it’s what the regulatory framework is going to be,” said one senior financier at an international bank. Saudi Arabia was “not a financial centre set-up”, the financier added.
The Saudi edict, dubbed Programme HQ, came into force this year as Riyadh continued to pour money into its ambitious development plans under Crown Prince Mohammed bin Salman. The spending spree has made the Saudi capital a magnet for those keen to tap into the deals.
The kingdom has warned companies they would not be eligible for new government business if they failed to open a Saudi regional headquarters with at least 15 employees, including executives overseeing other countries.
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