Finance Ministry appoints 5 Saudi banks as primary dealers in govt securities


Saudi Gazette report

— The Ministry of Finance, represented by the Debt Management Office (DMO), signed an agreement to appoint five Saudi banks as primary dealers in local government securities on Thursday. The accord was signed at the Ritz Carlton Hotel in Jeddah under the aegis of Minister of Finance Mohammed Bin Abdullah Al Jadaan.

The five financial institutions: Alinma Bank, Bank Al-Jazira, National Commercial Bank (NCB), Samba Financial Group and Saudi British Bank (SABB) will contribute to the development of the financial sector as part of the Kingdom's Vision 2030 programs.

Al Jadaan thanked the appointed Saudi financial institutions, pointing out that the agreement fits within the Financial Sector Development Program (FSDP) strategy as a means to achieve the Vision 2030 goals. The agreement will expand the investor base in the primary market to secure the Kingdom's domestic debt financing requirements, support the development of the secondary market by increasing the liquidity of local government securities, and provide advice to the Debt Management Office on the development of debt capital markets in the Kingdom to become a regional hub.

The minister stated that this agreement reflects the FSDP's pillars and objectives by enabling financial institutions to support the growth of the private sector in developing an advanced financial market capable of attracting fintech companies. It will also contribute to elevating financial inclusion and providing greater flexibility for investors in risks and returns management.

He pointed out that the Ministry of Finance — as part of its strategic mission to support and develop the private sector in line with the Vision 2030 objectives — considers the private sector as a fundamental pillar in the development process as the Kingdom seeks to develop its general financial system. He hoped that this agreement would achieve its objectives in attaining an advanced financial market that delivers closer integration between government and the private sector.

Fahad Al-Saif, DMO president, pointed out that this agreement represents part of a clear strategy in the short-, medium- and long-term to support the state's public finances efficiently, which is an essential component part of the office’s function. He stated that, it would raise the efficiency of financial transactions in local government securities through the establishment of clear and transparent frameworks for its clients, and enhance the level of transparency within financial institutions between primary and secondary securities' dealers.

Al-Saif praised the financial institutions' consistent support in developing the appropriate frameworks and strategies for this step, which will greatly aid the development of an advanced financial market that upholds the FSDP's objectives in line with the goals of the Ministry of Finance.

In addition, the local government securities IPOs will be offered to DMO through the appointed primary dealers. The DMO will announce the issuance date through these dealers at a later date, after meeting with them and arranging the necessary procedures to ensure the participation of all investors, in advance of the designated primary dealers being able to receive the non-primary investors' offers.

As for the local government securities in the secondary market in the Kingdom, primary dealers will take the role of market makers in cooperation with their authorized persons in accordance with Capital Market Authority's (CMA) regulations.