Assurances over Aramco's Liquidity Ratio, Loan Underwriting
At a time institutional investors are racing to win a stake in the Saudi Aramco IPO, considered the largest offering witnessed by global markets, the Saudi Arabian Monetary Agency (SAMA) said yesterday that the financial situation of banks in the Kingdom is very reassuring in terms of liquidity and lending rates.
“We have been absolutely certain that the liquidity situation in banks in the Kingdom is very reassuring, as we monitor it on a daily basis and we have both daily and weekly data,” Governor of the Saudi Arabian Monetary Authority (SAMA) Ahmad Al Kholifey told Asharq Al-Awsat.
“The liquidity situation in Saudi banks is strong despite Aramco's IPO, and it is now under our watch since the first day of Aramco's IPO, but in the meantime we are interested in the volume of loans that went out and are closely monitoring the banks,” Kholifey added.
Kholifey said that the Saudi banking sector has continued to achieve high growth rates, noting that real estate mortgages grew by 21% year-on-year (YoY) during the third quarter (Q3) of 2019.
Moreover, the Kingdom has maintained stable economic growth, with the gross domestic product (GDP) recording a 2.4% growth rate in 2018, after contracting by 0.7% in 2017.
The share of small and medium-sized enterprises in total finances grew by 6.2% YoY, according to a statement by SAMA.
Saudi Aramco completed the retail portion of its initial public offering (IPO) with 47.4 billion riyals ($12.64 billion) in orders on Thursday, according to Samba Capital, the IPO’s lead manager.
The energy giant is offering 1.5 percent, or three billion, of the company’s shares on the Saudi Stock Exchange (Tadawul) at an indicative price range of SR30-SR32 ($8-$8.53).
A third of those shares, 0.5 percent, are allocated to retail, or individual investors.
Samba said the shares sold amounted to 1,481,613,280. The firm added that institutional investors had put orders for SR118.86 billion during the first 12 days of the book-building process.
The deadline to submit bid forms for institutional investors, such as banks or hedge funds, is set for Dec. 4, while the deadline for retail investors — which starts Nov. 17 — is set for Nov. 28.