Saudi Arabia’s wealth fund is starting to add some new fine print to the documents it sends to bankers hoping to do business with the $925 billion investor. It wants to know whether their firms have obtained a regional headquarters license in the kingdom.
The move shows the government is doubling down on efforts to get international financial firms to boost their local presence. Those that don’t display sufficient commitment to the country could soon find it harder to win big business.
While banks had initially hoped to sidestep those rules, the pressure is getting harder to resist — especially after Goldman Sachs Group Inc. became the first Wall Street giant to get such a license.
“Once there is sufficient adoption of RHQ licenses in a sector then it increases the pressure on other players in the sector to follow,” said Waleed Rasromani, national managing partner for Saudi Arabia at law firm Linklaters. “Many firms in the financial industry are looking carefully at the RHQ rules at the moment.”
Asking for that license has now become part of the procurement process at the Public Investment Fund, people familiar with the matter said, declining to be identified discussing confidential information. The PIF isn’t currently requiring firms to get one, they said, though asking about their regulatory status is seen as adding to the pressure to do so.
That’s sparked anxiety among bankers seeking to work with the fund, even though the demands so far don’t appear to have affected their chances of winning mandates.
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