Citigroup has no plans to change its long-standing commercial ties with the Saudi royal family as the new government reports its Crown Prince Mohammed bin Salman was involved in the 2018 murder of journalist Jamal Khashoggi, FOX Business has learned.
Of all the major banks, Citigroup has some of the deepest business relationships with the Kingdom and its huge business empire which includes oil production and, more recently, a transition to other businesses such as tech.
But even with the new CEO Jane Fraser taking over the bank just this week, Citi will maintain those ties, according to people close to the company.
With a market capitalization of nearly $ 145 billion, Citigroup is the country’s fourth largest bank behind Wells fargo, Bank of America, and industry leader JP Morgan. A spokesperson for the company would not deny that Citi will continue its close relationship with the Saudis.
Analysts say Citi cannot afford to abandon the relationship with Saudi Arabia given its relatively weak financial position compared to other major banks. Citi has a return on equity (ROE) of 6%, or nearly half of JP Morgan’s 11% ROE, earning $ 12 billion in the fourth quarter of 2020 compared to $ 4.6 billion for Citi.
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Citi shares are lagging behind this year with an 11% gain, compared to JP Morgan’s 18% rise and Wells Fargo’s 23% jump.
It’s unclear exactly how much money Citigroup is making from its dealings with the Saudis, but analysts say it’s substantial. The royal family is one of the richest monarchies in the world with an estimated net worth of $ 1.4 trillion. It is also a key member of the Organization of the Petroleum Exporting Countries – known as OPEC – which plays an important role in setting global oil prices which have rebounded above $ 60 this year. the barrel.
Citigroup’s ties to the royal family run both deep and long. Saudi Prince Al Waleed bin Talal was at one point Citi’s biggest investor, helping the bank stay afloat by increasing its stake in the bank during the 2008 financial crisis that nearly pushed Citi into insolvency. We do not know what the current importance of bin Talal’s stake is.
Citi has sought to expand its presence and offerings in Saudi Arabia since obtaining a nation’s capital market license in 2018. Last summer, Citi’s chief operating officer in Europe, the Middle East and in Africa, David Livingston, presented Citi’s plans at the bank’s webinar conference titled “Navigating to the Future: What’s Next in a Post-Covid World?” Livingston said the bank was looking to increase its engagement in Saudi Arabia’s financial sector, not diminish it even as questions continued to swirl over Bin Salman’s role in the murder of Khashoggi, Washington Post columnist and outspoken family critic. Saudi royal.
Citi was one of the first banks hired when Saudi Arabia reopened to foreign investment in 2018, working on a deal that brought a Saudi airline to the stock exchange. He was also part of the consortium of banks that helped Saudi oil giant Aramco go public in 2019.
“We have had a very productive relationship with the Kingdom of Saudi Arabia for many years. Among the many transactions and services provided over the years, we were part of the Sovereign Syndicated Loan in 2016, and of course, the very successful inaugural Sovereign Bond issuance and Sukuk offering in 2017, ”said l former Citi Middle East chief Jim Cowles at Arab News. in 2018. Sukuk is Arabic for a type of bond that is built to comply with Sharia law.
Now Citigroup management does not appear to be swayed by the intelligence report released this week by the Biden administration that the crown prince – believed to be heir apparent to the throne occupied by his father, King Salman, – ordered the Khashoggi murder in 2018.
“Citi will not be stepping down as OPEC’s payer,” said Chris Whalen, chairman of Whalen Global Advisors and senior banking analyst. “Citi, like all banks, will not hesitate to do business with the Saud.”
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Citigroup, of course, is not alone among the big financial firms linked to the Saudis, even after Khashoggi’s murder. Money management center Black rock and investment bank white shoes Goldman Sachs all continue to do business with the Saudis while embracing social justice issues at home. Observers say the money is just too good to pass up.
Goldman declined to comment. Black rock shared a statement its CEO Larry Fink published two years ago, where he described Khashoggi’s murder as “horrific”, but added that “economic integration and diversification will help Saudi Arabia build a stronger economy and society. modern and sustainable for all its citizens “.