Saudi Arabian Monetary Agency

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Saudi Arabian Monetary Agency
مؤسسة النقد العربي السعودي
Headquarters Riyadh, Saudi Arabia
Established 4 October 1952; 61 years ago (1952-10-04)
Governor Fahad Al Mubarak
Central bank of Saudi Arabia
Currency Saudi riyal
ISO 4217 Code SAR
Website www.sama.gov.sa

The Saudi Arabian Monetary Agency (SAMA), established in 1952, is the central bank of the Kingdom of Saudi Arabia.

History[edit]

Prior to the establishment of the Saudi Monetary Agency, the Saudi Hollandi Bank, a branch of the Netherlands Trading Society from 1926 acted as a de facto central bank. It kept the Kingdom's gold reserves and received oil revenues on behalf of the Saudi Arabian government.[1] In 1928 it assisted in the establishment of a new Saudi silver coin, commissioned by King Abdulaziz which became the Kingdom's first independent currency. The Saudi Hollandia Bank handed over its responsibilities to the SAMA when it was established in 1952 and became a model for other foreign banks in the kingdom.[2]

Abdallah Sulaiman was a Najdi of humble background who worked his way up from clerk to the first Saudi minister of finance and close confidant of King Abdulaziz. Sulaiman surprisingly involved in probably the most significant attempt at administrative rationalization in the 1950s: the creation of the Saudi Arabian Monetary Agency (SAMA).[3]

In the early 1950s monetary chaos reigned in Saudi Arabia. Interested in at least minimal economic stability, the U.S. embassy and Aramco successfully lobbied the king to accept U.S. consultants into the kingdom. U.S. adviser Arthur Young managed to convince Sulaiman and the king of the need for basic monetary and banking regulation. Young was mandated by the king to draw up a charter for what was to become SAMA within a few hours. SAMA derived its income by charging the government for its services. Its first head was also an American, and accountants were hired from Lebanon. King Abdulaziz and Sulaiman had been convinced of the existential need for institution building in this strategic sector. SAMA’s charter and use of expatriate technocrats bolstered the relative independence of the body. After the Ministry of Finance temporarily sidelined SAMA, in 1957 the governorship was taken over by another expatriate, Pakistani Anwar Ali, who had come to the country with an International Monetary Fund mission and who held the post as a confidant of King Faisal until his death, in 1974.[4] Different from other “fiefdom ministries,” SAMA’s well-paid leadership used relative autonomy and Abdulaziz’s and Faisal’s clear reform mandates to become one of the best central banks in the Middle East.[3]

At the time of its establishment, Saudi Arabia did not have a monetary system of its own. Foreign currencies were used as a medium of exchange, along with Saudi silver coins. Saudi bank notes had not yet been issued. Banking was conducted by foreign bank branches. Therefore, the first task of the SAMA was to develop a Saudi currency. The SAMA also paid attention to the need for promoting the growth of a national banking system. In March 1961, Saudi Arabia converted to the Saudi Riyal, in accordance with Article VIII of the Articles of Agreements of the International Monetary Fund. In the 1970s and early 1980s, the SAMA focused on controlling inflation as the economy boomed, expanding the banking system, and managing foreign exchange reserves. From mid-1980s, SAMA’s priorities have been to introduce financial market reforms.[5]

Functions[edit]

SAMA is the Central Bank of Saudi Arabia, the functions of the SAMA include issuing the national currency, the Saudi Riyal, supervising commercial banks, managing foreign exchange reserves, promoting price and exchange rate stability, and ensuring the growth and soundness of the financial system, operating a number of cross-bank electronic financial systems such as SPAN, SARIE, and SADAD.[6]

Leadership and structure[edit]

A board of directors oversees the operations of SAMA. This comprises the governor, vice-governor and three other nominated members from the private sector. The terms of appointment are 4 years for the governor and vice-governor, extendable by Royal decree, and 5 years for the other members, also extendable by Royal decree. Members of the board cannot be removed except by Royal decree.

The SAMA senior management comprises the governor, the vice-governor and five deputy governors.[7]

Board of Directors[edit]

Name Position
Governor, Fahad Al Mubarak Chairman
Vice Governor, Abdulrahman Abdullah Al Hamidy Vice Chairman
Abdulaziz bin Zaid Al Quraishi
Muhammad Obaid bin Sa’eed bin Zagar
Abdulaziz bin Muhammad Al Athel

Senior Management[edit]

Organisational structure of SAMA as at May 2013.
Name Position Date of appointment
Fahad Al Mubarak Governor 13 December 2011
Abdulrahman A. Al Hamidy Vice Governor 30 August 2009
Hashem Othman Al Hekail Deputy Governor for Banking Operations 2 May 2013
Abdulaziz Abdulrahman Al Helaisy Deputy Governor for Supervision 2 May 2013
Ahmed Abdulkarim Al Kholifey Deputy Governor for Research And International Affairs 2 May 2013
Ayman Mohammed Al Sayari Deputy Governor for Investments 2 May 2013
Ali Abdulrahman Al Mahmoud Deputy Governor for Administration 2 May 2013

Former Governors[edit]

Name Tenure
Muhammad Al Jasser 2009 - 2011
Hamad Ibn Saud Al Sayari 1983 - 2009
Abdul Aziz Al Quraishi 1974 - 1983
Anwer Ali 1958 - 1974
Ralph Standish 1954 - 1958
George A. Bowlers 1952 - 1954

Balance sheet[edit]

The SAMA balance sheet is denominated in Saudi Riyals, which is pegged at an official rate of 3.75 against the US dollar. All currency notes issued by SAMA are fully backed by equivalent gold deposits.

(Millions of Saudi Riyals)

2007 2008 2009 2010 2011 2012*
Liabilities
Notes Issued 106,053 121,067 123,127 136,029 169,033 164,930
Government Deposits 514,123 1,052,336 933,912 1,008,251 1,203,477 1,299,676
Commercial Banks' Deposits 36,277 44,698 50,715 54,976 63,511 68,011
Foreign entities' Riyal Deposits 14,939 12,488 10,300 10,310 3,774 3,750
Other liabilities 525,424 479,406 452,599 495,823 618,069 617,698
Total 1,196,816 1,709,995 1,570,653 1,705,389 2,057,864 2,154,065
Assets
Currency cover (gold) 106,054 121,066 123,127 136,029 169,033 164,930
Cash in vault 23,842 27,053 23,876 25,060 29,187 24,171
Deposits with banks abroad 246,792 379,487 335,673 343,887 414,007 495,246
Investments in foreign securities 790,559 1,154,247 1,071,542 1,181,916 1,427,820 1,446,610
Other assets 29,569 28,142 16,435 18,497 17,817 23,108
Total 1,196,816 1,709,995 1,570,653 1,705,389 2,057,864 2,154,065

2012 figures are at end of 1st quarter.[8]

See also[edit]

References[edit]

  1. ^ "Saudi Hollandi Bank History". Saudi Hollandi Bank. Retrieved 26 May 2013. 
  2. ^ "SHB Overview". Saudi Hollandia Bank. 
  3. ^ a b Hertog, Steffen (2007). "Shaping the Saudi state". Int. J. Middle East Stud. 39: 539–563. doi:10.1017/S0020743807071073. 
  4. ^ "Telegram From the Embassy in Saudi Arabia to the Department of State". US State Department. Jeddah. 3 December 1969. Retrieved 11 August 2013. 
  5. ^ SAMA History SAMA
  6. ^ About the SAMA SAMA
  7. ^ "SAMA Management". Saudi Arabian Monetary Agency. Retrieved 26 May 2013. 
  8. ^ Saudi Arabian Monetary Agency 48th Annual Report, p. 36