Banque Saudi Fransi

19 December 2010

The Saudi bank is focused on expanding its retail division

Company snapshot: Banque Saudi Fransi

Date established June 1977

Main business sector Banking

Main business region Saudi Arabia

Chief executive officer Jean Marion

Banque Saudi Fransi structure

Banque Saudi Fransi dates back to 1949, when Banque de l’Indochine established a branch in Jeddah. Its successor, Banque Indosuez, had to form a joint stock company as a result of new regulations requiring foreign companies to sell off majority share holdings. Consequently, Banque Saudi Fransi was established in 1977.

Today, France’s Credit Agricole has a 31.1 per cent stake in the bank, with the remaining shares listed on the Saudi Stock /Exchange, (Tadawul), and held by local corporations and nationals. Banque Saudi Fransi is the second largest of several joint venture banks in the kingdom and the sixth largest of the 11 local banks.

Banque Saudi Fransi in numbers
Net income (SRbn)
*=Nine months to September 2010. Source: Banque Saudi Fransi

Credit Agricole has a management agreement with the bank and has two representatives on the 10-member board of directors. The senior management team also includes five members seconded from Credit Agricole, including chief executive Jean Marion and chief financial officer Philippe Touchard.

Traditionally focused on serving business clients, the bank has developed into one of the largest corporate banks in the kingdom. Corporate loans make up about 90 per cent of its total loan book.

The bank employs more than 2,200 people, with about 50 per cent of those in the retail banking area. The bank has a paid-up capital of SR7.232bn ($2.061bn).

Banque Saudi Fransi operations

Banque Saudi Fransi is a full service bank, offering products across retail and corporate banking.

The retail division operates 75 branches throughout the kingdom, with 274 cash machines and 500,000 retail customers. It also operates a wealth management business for high net-worth clients and has several joint venture companies targeting other sectors, including Allianz Saudi Fransi, an insurance business with Germany’s Allianz; Caam Saudi Fransi, an asset management firm with France’s Amundi and Sofinco Saudi Fransi, a joint venture with France’s Sofinco in consumer finance. The retail bank helps provide the deposit base to fund corporate lending.

Operating income by business segment
Corporate banking46.1
Retail banking30.4
Investment banking and brokerage2.8
Source: Banque Saudi Fransi 

The bulk of Banque Saudi Fransi’s earnings come from corporate and investment banking activities. The bank has a strong business in project finance, Islamic finance and corporate finance. It conducts its investment banking business through its Calyon Saudi Fransi subsidiary, concentrating on private placements, debt markets advisory, mergers and acquisitions, and initial public offerings.

The treasury business offers clients trading in foreign exchange, bonds, interest rate swaps and structured products. It is also active in the local syndications market.

Banque Saudi Fransi counts many of the kingdom’s largest corporates among its client base, including Saudi Aramco and Saudi Basic Industries Corporation.

Through its 27 per cent stake in Banque Bemo Saudi Fransi, the bank has also developed a foothold in Syria’s financial sector. Its Syrian arm is now the largest foreign bank in the country in terms of deposits and loans.

Banque Saudi Fransi ambitions

Historically, the bank’s strength in corporate banking has led to a lack of focus on retail customers. This is now changing as the bank tries to develop its retail business. French shareholder Credit Agricole is taking a more active role in putting resources into Banque Saudi Fransi to help drive the bank’s retail expansion.

Greater cooperation between the local and international teams will help Banque Saudi Fransi compete with banks such as Sabb, which has successfully used its partnership with the UK’s HSBC to develop its local lending and advisory business. It should also help the firm mimic the success of local banks, including Samba, which has a good mix of profits from both corporate and retail businesses.

Total assets (SRbn)
*=At September 2010. Source: Banque Saudi Fransi

The recent slowdown in credit growth and low interest rates have taken their toll on the bank’s profitability. But Banque Saudi Fransi’s strong businesses lines in project lending, advisory and corporate lending should help it boost profitability as credit growth resumes.

A successful bond issue earlier this year helped the bank tap long-term dollar funding – the first Saudi bank to do so. The deal was also part of the bank’s efforts to increase transparency in the Saudi banking market by taking a roadshow to international investors and maintaining communication with them.

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