Aramco IPO positive for Saudi banking; Riyad Bank working to accommodate it: CEO

Saudi Aramco’s initial public offering (IPO) will be a positive move for the banking sector, as Saudi banks are ready and enthusiastic about the expected offering, Riyad Bank’s CEO Tarek A. Al-Sadhan told Al Arabiya channel.

"Banks have been working closely with the Saudi Arabian Monetary Authority (SAMA) to accommodate the offering size," Al-Sadhan said.

As for providing financing to clients, he said that it depends on the credit capability of each client after assessment, pointing out that banks have enough capacity and liquidity to finance the IPO.

When asked about the percentage of deposits expected to be allocated for Aramco’s IPO, Al-Sadhan said: “It is very difficult to determine any percentages with the lack of some information concerning the size and timing of the offering. Deposits will certainly see pressure due to the IPO.”

He pointed out that Riyad Bank’s loan-to-deposit ratio ranges between 86 percent and 87 percent. Saudi banks cooperate with SAMA to ensure that all ratios, whether loan-to-deposit or liquidity, fall within limits.

According to data compiled by Argaam, SAMA’s governor Ahmed Alkholifey said yesterday that the deposits of local banks are enough to finance Aramco’s IPO, but will depend on the prospectus.

Aramco’s Chairman Yasir Al-Rumayyan has said recently that the IPO will be launched soon.