LONDON: Saudi Arabia’s SNB Capital and BNY Mellon, the oldest bank in the US, have deepened their partnership to launch a new data service for big investors in the Kingdom to manage complex investment assets efficiently.
The agreement will allow SNB Capital to use BNY Mellon’s data platform within its IT infrastructure in the Kingdom. It aims to link local and foreign assets across the front, middle, and back financial offices around the world.
It is the third agreement the banks have signed on this project in 14 months. The platform will “deliver accurate and timely data, gauge risk exposure, and provide system-wide security” according to a statement.
Akash Shah, BNY Mellon chief growth officer, told Arab News: “The data-forward financial investment infrastructure we have been designing in the Kingdom will act as a central orchestrator linking sovereign funds, pension funds, wealth managers, exchanges and regulators.
“This will be a best-in-class system with new rails that run high-speed trains.
“With a focus on growth in mind, the infrastructure will allow for greater transparency and resilience at a lower cost.”
The US banker said: “We are in the early innings” of a project that may take five years.
New assessment tools
He noted that within a few weeks when clients look at their securities portfolios, they will have new tools to assess how they are performing and find easier, cheaper ways to trade.
Shah added: “We say to clients, ‘This is your data.’ And this leading-edge system will give them new ways to use it. They will be able to do more as more services come online.”
Initially, the new systems will primarily handle the custody of funds. BNY Mellon, which was founded over 230 years ago, handles $45 trillion of assets in custody for governments and other largest clients around the world.
This gives the bank the authority to hold the securities of large clients and perform a range of services such as transaction settlements, interest payments, and foreign exchange management.
Custody services accounted for around a third of the bank’s $4 billion of revenues in the third quarter of this year, Shah said.
'Financial investment cloud'
The US banker added that in 12 months, clients should begin to see the beginnings of “a financial investment cloud” in the Kingdom. He expects fintech firms to begin to lead the way, conducting financial services over the growing system.
In five years, Shah hopes to see a mature technology infrastructure with buyers, sellers, the exchange, and regulators conducting trades and monitoring transactions.
The move by the US lender and SNB Capital, a unit of Saudi National Bank, follows plans by the firms to integrate securities services for large asset owners based in the Kingdom agreed in August.
This is built on an initial alliance signed between BNY Mellon and SNB Capital (previously called NCB Capital) in October last year to handle the custody services of regional clients between the two banks, rather than have these services split between a host of other lenders.
The deals are aimed at establishing best practices for asset management, brokerage, and custody functions set out in Saudi Arabia’s 2017 Independent Custody Model, which seeks to boost capital flows in the Kingdom.
SNB Capital is the securities, asset management, and investment banking arm of Saudi National Bank, the Kingdom’s largest commercial bank.
The unit is the largest asset manager in the country with $57 billion in assets under management in June 2021. It settled 22 percent of all trades on Tadawul in the final quarter of last year.
It was formed after Saudi Arabia’s biggest lender National Commercial Bank and Samba Financial Group completed a merger in July to create a bank with $223 billion in assets.
Complex data management
SNB Capital CEO Rashed Sharif said: “Our leading role in growing and developing the Kingdom’s capital markets and the financial sector in line with Vision 2030 is highly dependent on having the right technology, capabilities, and partners.
“This deployment reinforces our top market position when it comes to serving the complex data management and reporting needs of institutions and large asset owners in the Kingdom.”
BNY Mellon’s Shah said the drive for the move between the New York bank and SNB Capital comes as “global and regional trends begin to overlap.”
Foreign investment in Saudi Arabia
He added that the Kingdom plans to open up to further foreign investment, while outside investors want more exposure to the largest economy in the MENA region.
Shah said: “Foreign investor appetite is high in Saudi Arabia and throughout the region. Some of the world’s most sophisticated investors have reached out to us, and they want the capability to manage the big bets they are increasingly making.”
“There are tremendous growth opportunities in the region. We will scale up our base in the Kingdom, which we view as a center of gravity for our work in the region, and we continue to scale in the UAE’s dynamic market.”
He added: “The appetite to take bold steps has never been higher.”
BNY Mellon has worked with clients in Saudi Arabia for more than 30 years and has plans to add more diverse local talent. It was not able to provide details on the current numbers of locals who work in its Riyadh office but pointed out that Mona Al-Hussain, who joined the business in March 2020, is head of its Saudi office.
In the region, the US bank also has a presence in Dubai, Abu Dhabi, Cairo, and Beirut.
