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Finance

Introduction to financing in the Kingdom

• Investors in the Kingdom will also have access to both debt and equity financing from the Saudi financial sector.  Financing is available to Saudi and non-Saudi businessmen and entities.
• Saudi entities may also borrow from non-Saudi banks and often employ the services of offshore banking units in Bahrain, which is a major banking center for financing.
• The financial sector is regulated and controlled by the Saudi Arabian Monetary Agency (SAMA).  Policies on financing and terms of payment aim to facilitate the free flow of financial resources.

General financing availability

• Local commercial banks can also provide credit and project financing to businesses in the Kingdom. The private sector also has access to a variety of credit instruments. Credit from the commercial banks is allocated on market terms, and foreign investors can obtain credit on the local market. 
• Major commercial banks in Saudi Arabia include:
  – Arab National Bank
  – Al Jazira Bank
  – Al Rajhi Banking and Investment Corporation
  – Bank AlBilad
  – National Commercial Bank
  – Riyadh Bank
  – Saudi American Bank
  – Saudi British Bank
  – Saudi Fransi Bank
  – Saudi Hollandi Bank
  – Saudi Investment Bank

Equity financing

• SAMA and the Capital Markets Authority (CMA) supervise the Saudi stock market, which is known as the Tadawul. 
• The Tadawul has grown significantly over the past 20 years and is now the largest stock market in the Arab world. In 2008, the value of trading exceeded $500 billion.
• The number of Joint Stock Companies that trade in the Saudi Arabia Stock Market has increased steadily, with approximately 127 firms now listed on the exchange.
• International investors have been approved to participate in the Tadawul through mutual funds since 1997

Special financing options

• Project financing is also available from specialized credit institutions in the Kingdom that have been set up to provide long-term loans to vital sectors of the economy.  These specialized credit institutions and their related financing areas include:

 

Import payment process

• Most Saudi imports are received on the basis of an irrevocable letter of credit (L/C), although other arrangements such as an open account, cash in advance, and documentary collection are also permitted.
• Imports do not require mandatory, maximum or minimum credit terms.
• Typical turnaround times in local credit transactions range between three and four months.