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Article: Local houses play the market: bankers are adapting to a changing economic environment by putting their money where the risk is--in the stock market.(BANKING)
- Article from:
- MEED Middle East Economic Digest
- Article date:
- September 23, 2005
- Author:
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As the economy steams ahead, Saudi bankers are having to adapt to a rapidly changing environment. Riyadh's drive to reduce government debt, coupled with increased liquidity, has led to a shift in strategy by Saudi banks away from government lending to investment in the stock market.
According to a recent report by Cairo-based EFG-Hermes: "The flattening of the yield curve is closing the gap between short-term interest rates and long-term interest rates. Consequently; this is making it less profitable for banks to invest in long-term bonds. Furthermore, the fact that the Saudi government is paying down its debt is making it even more difficult for banks to find an ...