CEO & Board Member, HSBC Saudi Arabia
"We at HSBC are significantly ahead in terms of scale and consistency in this market and the wider region than any other international bank."
Faris I. AlGhannam, CEO and Board Member of HSBC Saudi Arabia talks about the country’s financial sector and the role HSBC is playing in its development.
What are the defining trends that are shaping Saudi Arabia’s financial sector?
For many decades, public-sector spending and capital expenditure have been the main driver for Saudi Arabia’s economic performance. In turn, the country was directly reliant on government revenues, which predominantly came from hydrocarbon resources. However, this has started to change under Vision 2030. Today, government revenues have already started diversifying, with around 30% coming from taxes. On the other hand, more capital expenditure is expected to come out of the private sector in the coming years, driven by many mega and megaprojects and different initiatives and programs, such as Shareek. According to government announcements and information, it is expected that more than SAR25 trillion will be invested in the Kingdom from now until 2030, and more than 50% of that will come from the private sector. In order to achieve the above, you will need a financial sector that can cater to the expected increase in the size of the market and this expected investment boom. Hence the Financial Sector Development Program (FSDP), which is a vision realization program intended to provide a roadmap on how the financing capabilities of this economy should evolve as investments evolve. Commercial banks will remain a key source for that funding, though the central bank and the Shareek program itself seek to remove the bottleneck of capacity by supporting and directing banks to do more on originate-to-distribute (OTD). That is a process whereby banks may originate loans, but then offload them to secondary investors or other financial institutions outside the country, bringing in more liquidity. In addition, we should expect to see more Saudi banks tapping capital markets for financing the growing needs of their clients. For example, since 2021, many Saudi banks started to tap into international markets to issue Sukuk and bonds to increase their funding capacity. Hence, the development of debt capital markets and credit market in the Kingdom is a key objective under the FSDP. For example, during periods of 2021 and in 2022, the Saudi equity capital markets were more active and larger in size even than most European countries, and in 2022 they were larger than the London Stock Exchange.
How is HSBC capitalizing on the wave of financing activity that characterizes the Kingdom?
We at HSBC are significantly ahead in terms of scale and consistency in this market and the wider region than any other international bank. For us, through the cycle, even when markets slowed down, we never stopped investing in the Kingdom and in the region, particularly and most importantly investing in the development and training of the human capital and the local talent. In Saudi Arabia, we have a significant footprint of people on the ground, with the regional equities’ leadership based here. This is also the case with custody, where one of the key global sectors is led from Riyadh. In capital markets, investment banking, and advisory, we have the largest team on the ground compared to any other bank, global or local. As we continue to invest and grow in this market, and despite our already large scale in the country, we plan to expand by making a 20-30% increase in our workforce in the coming three years, which is very exciting for me personally and for us as a team and institution.
Know-how and expertise are part of HSBC’s competitive advantages in Saudi Arabia. What is your approach to human capital?
Human capital is central and our top priority in Saudi Arabia. The right strategy and model to address this is to constantly invest and develop with an eye on the medium-term requirements and not only the short-term. For HSBC, in the last few years, we have been continually developing the top leadership layers of the company. We subsequently focused on the second layer, the third, and so on, continuing until we achieved wide-spanning investment in our people across the whole business. We already have many younger Saudi nationals, both men and women, working for us around the world, and they may well choose to subsequently return here, bringing the great experience gained from working across the global HSBC family. I think we have the best quality people when it comes to our segment and market, and that contributes to our brand strength here and our long-term commitment to Saudi Arabia. Many of our former HSBC employees are today partners, clients, or even competitors, and they spur us to do better.
What is your main target or priority on your agenda for this year?
For 2023-2024, “growth” is our priority, and we have already started investing in resources on the ground and globally in order to be able to participate in the development of the Saudi market and economy and be able to cater to the growing and increasing complex requirements of our clients in the Kingdom, reaffirming our commitment to clients and the market. Second, we will focus on bringing our global expertise and support to the Kingdom, including key themes such as ESG and the energy transition, which is a top priority for Vision 2030. The third priority is to continue to play our role as a bridge between the Kingdom of Saudi Arabia and the rest of the world, especially in key trade corridors such as Asia and China as well as Europe, where we are an established market leader.