Saudi Arabia’s efforts to ease a recent liquidity crunch in the financial system are working and have calmed markets, according to the head of one of the kingdom’s largest lenders.
(Bloomberg) —
Saudi Arabia’s efforts to ease a recent liquidity crunch in the financial system are working and have calmed markets, according to the head of one of the kingdom’s largest lenders.
The Saudi Central Bank managed the shortage of liquidity “very well” after deposit growth slowed and interest rates rose sharply, Tony Cripps, chief executive officer of Saudi British Bank, said in an interview with Bloomberg TV on Monday. “I think liquidity is just fine.”
The central bank stepped up the use of a mechanism to pump money into the financial system as it sought to tackle a liquidity crunch that pushed borrowing costs for lenders to the highest in decades, Bloomberg reported in December.
The intervention relied on open market operations — transactions that allow the central bank to provide or drain short-term liquidity in exchange for securities from lenders, people with knowledge of the matter said at the time.
Saudi Central Bank Steps Up Efforts to Ease Liquidity Crunch
Since the measures, “the market has calmed down and Saibor rates have normalized as slightly higher than historic levels,” Cripps said, adding that liquidity at Saudi British Bank is “very strong.”
The outlook for the kingdom’s banks this year is “strong” but the sector may grow “slightly slower” than in 2022, Cripps said. He expects demand to continue at the corporate and institutional levels for infrastructure projects.
–With assistance from Dana Khraiche.
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