'We are working out legal issues with SAMA and the Central Bank of Kuwait,' says an NBK spokesman. He says the bank plans to focus on internet, consumer and corporate banking and asset management and expects the branch to open in early 2003.

The move by the Saudi authorities to open the market further to regional institutions has been greeted with surprise by bankers in Riyadh. 'We didn't see this coming, though if licences are to be issued, NBK is the sort of bank you would expect them to go to,' says a senior banker in Saudi Arabia. 'Whether this means a string of other licences are issued remains to be seen, but from the GCC perspective, Saudi Arabia is by far the largest and most attractive banking market so there is no shortage of players looking to enter.'

Strong as NBK is, the establishment of a single-branch operation is unlikely to have much of an immediate impact on the business of the 10 Saudi banks. 'The focus on asset management is likely to prove the most fruitful area for NBK but, in principle, this market would have been opened to them anyway when the capital markets law is passed,' says the banker.