Key Features of Islamic Banking Business in the Kingdom of Saudi Arabia

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Many of the larger banks have been providing a full complement of services to both businesses for their commercial needs, and individuals for their personal banking needs. The smaller banks concentrate on localized services and providing retail services for the individual sector. As of the mid-70s in line with the Saudification of the financial sector, all banks including the then Dutch (Saudi Hollandi Bank), then American (Samba Financials, formerly Saudi American, formerly Citibank), and then British (SABB). The new financial regulation required that all financial institutions be the majority (60%) owned by Saudi nationals, therefore rendering all KSA banks Saudi. Also known as Al-Ahli Bank, the NCB was founded in 1953 with the distinction of being the first commercial bank in Saudi Arabia. In 1999 the government became its majority stockholder through the Public Investment Fund of the Ministry of Finance (NCB, 2010). Presently, NCB is the largest bank in the Arab world, with assets amounting to SAR 220 bn (about US$ 55.6 bn). a full employee complement of 5.400 people, 86% of whom are Saudi. 2 million clients served through 266 branches. NCB has expanded its branches to Beirut and Bahrain, with representative offices in Singapore, Seoul, and London. The bank has fielded several alternative sharia-compliant banking services and has pioneered in the spread of Islamic banking in Arab territories as well as internationally (BMI, 2009). Riyad Bank is counted among the largest financial institutions in the Kingdom of Saudi Arabia. It boasts of a strong and expanding corporate as well as retail banking franchise, and by market value, it is Saudi’s third-largest lender (see Table 1 below). Its principal strengths lie in its excellence in providing the five principal banking services, which are retail banking, corporate banking, investment banking, and brokerage, treasury and investment.