Deutsche Bank officials have declined to comment on the licence award but it is understood that the bank's focus will be on investment banking activities, particularly on the debt and equity capital markets. There are no plans to launch consumer banking operations.

The establishment of a physical presence in Saudi Arabia is a landmark in Deutsche's roll-out into the region. It has recently expanded its office in Dubai and has a growing business in Iran.

Saudi Arabian Monetary Agency (SAMA - central bank) has been a reluctant issuer of licences. Between the establishment of Saudi American Bankin 1980 and the licence issued to Gulf International Bankafter its merger with London-based Saudi International Bank in 1999, only one licence was issued, to Al-Rajhi Banking & Investment Corporationin 1987. The pace has since quickened, with three other GCC banks - Emirates Bank International, National Bank of Kuwaitand National Bank of Bahrain - ushered in during 2002 (Saudi Banking, MEED Special Report, 9:5:03, pages 21-36).

No formal announcement was made of any change in policy but it was widely assumed that enthusiasm for greater regional integration of the financial services industry supported the granting of licences to robust regional institutions. The issuance of a licence to Deutsche is a more radical step.