The global financial crisis is still far from over. European governments are still working on further bailouts for the banking system and in the US, investment bank Goldman Sachs reported only its second quarterly loss since 1999, sparking fears that other banks were similarly troubled.

But the situation is totally different in Saudi Arabia. Banks there have just reported a 27 per cent rise in profits in the third quarter and lending growth is improving, albeit slowly.

Two deals in October show how liquid the Saudi banks are. Earlier this month, the Saudi Arabian Mining Company (Maaden) closed a $3.6bn deal to finance an aluminium scheme. Shortly afterwards, local telecoms operator Etihad-Etisalat (Mobily) asked banks for $2.7bn. It got offers for about four times that amount.

Mobily is now in the comfortable position of being able to pressure the banks on price, knowing that they are desperate to book good quality assets many will accept. Pricing has been set at about 65-70 basis points above the Saudi interbank offered rate (Sibor). Three local banks are already understood to have promised to fund the deal at that pricing.

While Saudi banks are so liquid, top-tier borrowers will be able to extract great deals out of them. The challenge is for other clients. Banks are still wary about lending to anyone, but the most creditworthy clients.

For a select few, that will be great news. But for the wider economic recovery in the private sector in the kingdom, it means tough times will continue.

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