Saudi officials downplay risks to global bank sector

AFP , Thursday 16 Mar 2023

Saudi finance officials on Thursday downplayed risks to the global banking sector after days of market turmoil fuelled by the implosion of two tech industry lenders and pressures on Credit Suisse.

Mohammed al-Jadaan
Saudi Finance Minister Mohammed al-Jadaan. AFP


"I think large banks are properly supervised and therefore the risk that some people see, I don't see, at least the well-known large institutions worldwide," Saudi Finance Minister Mohammed al-Jadaan told AFP in an interview.

His comments came one day after Credit Suisse's shares closed 24 percent lower after the chairman of Saudi National Bank, its main shareholder, said it would not raise its stake due to regulatory constraints.

Credit Suisse rallied on the stock market Thursday after grabbing a $54 billion central bank lifeline in a bid to restore investor confidence.

"To me, the reaction of yesterday was possibly an overreaction simply because the market is very edgy," Jadaan said.

Saudi National Bank chairman Ammar AlKhudairy also minimised what he described as a "panic".

"If you look at how the entire banking sector has dropped, unfortunately, a lot of people were just looking for excuses," he told CNBC.

"It's panic, a little bit of panic. I believe completely unwarranted, whether it be for Credit Suisse or for the entire market."

Without citing specific financial institutions, Jadaan said "multiple failures" including on the regulatory front had fuelled troubles in the sector, "whether it is supervisory, whether it is management, whether it is concentration, whether it is mismatch of asset liability".

He added that he did not believe those risks applied to the kingdom.

"Just focusing on Saudi, you will go back to history, and you will hear a lot of comments that the two regulators in Saudi Arabia are quite conservative. And that's what we then benefit from in a situation of distress," he said.

He spoke to AFP on the second and last day of a conference in Riyadh intended to highlight reforms in the Saudi financial sector, part of Crown Prince Mohammed bin Salman's sweeping "Vision 2030" reform agenda.

The world's biggest crude exporter is pitching a growing stock market, low inflation and last year's official GDP increase of 8.7 percent as lures for investors.

On Sunday energy giant Saudi Aramco said it achieved "record" profits totalling $161.1 billion in 2022.

"I think what attracts people particularly at this time and this region, particularly Saudi Arabia, is it is a region that is largely managed in a way that we haven't seen the troubles that we have seen elsewhere," Jadaan said.

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