Page 166 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

150 Dubai & Co.

to stand out in a competitive marketplace. The Saudi American
Bank changed its brand to “Samba,” presumably to reflect its
embedded status and local authenticity. The Saudi British Bank
changed to “SABB.” Nonetheless, SABB still proudly displays the
HSBC hexagon as part of its logo, just as Saudi Hollandi uses the
ABN Amro logo. These emblems signal global presence and world-
class standards—helping the banks attract some of Saudi Arabia’s
most sophisticated and lucrative clients.

What Next for the JV Banks?
The sustained oil boom of the 2000s has again made the Saudi bank-
ing sector a hot market to be in. Unlike the 1970s, however, the reg-
ulatory trend is toward openness: Saudi Arabia is a member of the
WTO and is liberalizing its economic policies. There is a vision for
the future that would allow foreign banks to hold controlling stakes
20
in JV banks (not to exceed a 60 percent interest, however). The
Saudi regulators, even as they allow international banks to increase
their investment and have majority control, seem determined to
protect the equity privileges of the local investors. World-class
expertise will also be needed more than ever as competition in the
sector mounts. In late 2006, for example, the Saudi cabinet granted
a remarkable 12 new insurance licenses in a single session—making
the sector more competitive than ever. In fact, foreign banks have
become more active in the riskier parts of the banking business,
such as the investment banking, asset management, and brokerage
operations. The international banks’ negotiating position relative to
local investors is improving markedly, signaling the possibility of
another meaningful shift in the industry landscape. When the dust
settles, where will foreign banks stand? Time will tell.
Joint ventures can be a promising vehicle for multinationals to
pursue more intently opportunities in GCC countries, but they are
by no means easy to execute. Several factors must converge—from
market attractiveness to a supportive regulatory environment and
beyond—to enable a multinational to move up the Engagement
Spectrum. Figure 5.2 illustrates some of the key requirements.

Fundamental Market Attractiveness
The first factor that multinationals must assess is whether there are
aspects of the GCC market that are attractive to them—and, if so,