Under the Banking Control Law (“BCL”), no person or entity is allowed to carry on “Banking Business” within Saudi Arabia without being licensed in accordance with the BCL. “Banking Business” is widely defined in the BCL to mean the business of “receiving money on current or fixed deposit accounts, opening current accounts, opening of letters of credit, issuance of letters of guarantee, payment and collection of cheques, payment orders, promissory notes and other similar papers of value, discounting of bills, bills of exchange and other commercial papers, foreign exchange transactions and other banking business.”
The licencing of a foreign bank to carry on banking business involves an application to the Saudi Arabian Monetary Authority (“SAMA”), which submits its recommendations to the Minister of Finance, who issues such licenses. Following the Minister of Finance’s recommendation, licenses granted to a foreign bank are further subject to any bank finance and other conditions stipulated by the Council of Ministers.
It is noteworthy that, in recent years, the number of branches of foreign banks licensed to carry on business in the Kingdom of Saudi Arabia has increased, with, for example, both Standard Chartered Bank and Credit Suisse receiving licences. This illustrates both the increasing attractiveness of the Saudi market to foreign banks and the desire of the government to increase the pool of financing options open to borrowers in the market.
