Aramco IPO not causing liquidity issues for banks: Saudi central bank

Saudi Arabia’s central bank is monitoring banking indicators on a daily basis and is not seeing any impact on liquidity from oil giant Aramco’s initial public offering (IPO), its governor said on Sunday.

Saudi Arabian Monetary Authority governor Ahmed al-Kholifey told Reuters on the sidelines of a conference that he had no concerns about liquidity due to the size of Aramco’s IPO.

“We are monitoring all indicators on a daily basis and if there is any squeeze on liquidity, definitely we’ll be injecting liquidity but so far … everything is assuring,” he said.

Aramco plans to sell 1.5% of the company, giving it a potential market value of as much as $1.7 trillion in a deal that is the centrepiece of Crown Prince Mohammed bin Salman’s plans to diversify the oil-dependent economy.

The IPO, which aims to raise as much as $25.6 billion in proceeds, has attracted approximately 73 billion riyals ($19.5 billion) in institutional and retail orders so far, Saudi Arabia’s Samba Financial Group said on Thursday.

Saudi banks are marketing loans, with some offering four times the usual limits, two financial sources told Reuters earlier this month, adding they were able to do so as they will hold the stock on behalf of clients so have it as security.

The government has encouraged rich Saudis to invest, with many viewing it as an opportunity to show their patriotism after a September attack on Aramco facilities that struck at the heart of the kingdom’s energy industry.

“The Saudi banking sector enjoys very high levels of liquidity compared to Basel requirements,” Kholifey earlier told the conference, referring to international banking rules.