Riyadh (The Thursday Times) — Saudi Arabia and the UAE are in growing competition to dominate investment banking in the Middle East. With Saudi Vision 2030 driving growth, the kingdom is mobilising its resources to attract leading global financial firms to Riyadh, challenging Dubai's standing as the region's financial hub. The rivalry is reshaping the financial landscape in both countries, creating opportunities and challenges for local and international players.
Saudi Arabia pushes Riyadh as a global financial hub
Saudi Arabia's strategy relies on using its economic transformation and wealth to compel major companies to move their regional headquarters to Riyadh. The Saudi Ministry of Investment is actively working to attract global firms by granting regional licences, a requirement regarded as essential to securing deals inside the kingdom. Recent approvals by the Ministry of Investment for companies such as Citigroup show Riyadh's commitment to developing its financial market.
The Saudi market has seen unprecedented expansion in equity and debt markets, which has led it to overtake the UAE in investment banking fees this year. As economic and social reforms accelerate, Riyadh has become more attractive to financial firms seeking a share of the kingdom's transforming economy. Prominent deals, such as Aramco's return to international debt markets and share sales by the Public Investment Fund, show the scale of the financial activity reshaping the country's financial system.
The UAE strengthens its position despite the challenges
Despite intensifying competition from Saudi Arabia, the UAE remains a strong financial centre. Dubai and Abu Dhabi continue to attract global asset managers, private equity firms and hedge funds. For example, BlackRock obtained a commercial licence in Abu Dhabi, strengthening its presence in the Abu Dhabi Global Market.
Hedge funds such as Eisler Capital and Aster Capital have added further strength to Dubai, which continues to attract global professionals. Even with Saudi competition, the UAE still has the advantage of its advanced infrastructure and a lifestyle that appeals to expatriates. Listings such as those of the education platform Alif and the shopping platform Lulu show the diversity of the Emirati economy, especially with the growing focus on technology and digital infrastructure.
Investment banking fees reveal the race
Saudi Arabia and the UAE have seen record increases in investment banking fees, which highlights the escalating competition. In Saudi Arabia, sovereign deals such as initial public offerings and share sales by government entities, alongside the expansion of the financial market, have pushed fees to historic levels. Deals such as the Public Investment Fund's sale of a stake in Saudi Telecom show the maturity of the market and point to the kingdom's ability to attract international investors.
In the UAE, the strategy rests on drawing investors to the private sector, which has led to prominent listings. However, the UAE still faces challenges in matching the levels of growth achieved by Saudi Arabia, especially in sovereign equity markets.
Emerging trends in debt and equity markets
With growing competition, both countries are focusing on developing new products to diversify their markets. Saudi Arabia is expanding its use of tools such as securitisation and secondary markets (repo), with attention to equity derivatives. The kingdom is also working to widen the sukuk market to include small and medium-sized companies, which strengthens financial inclusion.
The UAE, for its part, is focusing on diversifying its issuer base, with greater support for the private sector and encouragement for technology companies to list. These efforts show a strategic shift in the UAE's economy, which aims to be more resilient and sustainable.
The expansion of financial instruments points to a long-term race between Saudi Arabia and the UAE to build global financial centres. Saudi Arabia's Vision 2030 and the UAE's strategic initiatives will continue to shape this landscape, ensuring that regional markets develop in an unprecedented way.
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