Saudi British Bank: HSBC's Saudi Arabian Experience
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Case Code: BSTR076 Case Length: 22 Pages Period: 1959 - 2003 Pub Date: 2003 Teaching Note: Not Available |
Price: Rs.500 Organization: HSBC, Saudi British Bank Industry: Banking, Countries : Saudi Arabia Themes: Business Environment |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
SABB: HSBC'S 'Arabian Nights' (And Days)
HSBC's decision to enter the Gulf region was a part of the group's thrust on globalization in the 1950s. In 1959, the company commenced its operations in the Middle East by purchasing the British Bank of the Middle East. Originally known as the Imperial Bank of Persia, the British Bank of Middle East had pioneered banking operations in several Gulf regions during the 1940s and 1950s.
HSBC renamed the company HSBC Bank Middle East Limited. After this, HSBC began operating in places such as Aden, Libya, Sharjah, Qatar, Tunisia, Abu Dhabi, Morocco and Saudi Arabia. During the 1960s, the banking industry in the Middle East was going through a phase of nationalization. As a result of this, HSBC had to close operations in Aden, Libya, Syria and Iraq. However, the company reinforced its branch network in the oil rich countries and formed new alliances with local banks. In 1978, HSBC established the Saudi British Bank (SABB) as a joint stock company under Saudi Arabia's royal decree. SABB was formed to take over the British Bank of Middle East's branches in Saudi Arabia...
Towards Value-Added Islamic Banking
From 2000 onwards, SABB introduced several innovative products and services to compete with large-sized banks in the kingdom. The new Islamic banking products and services it offered were in line with the government's policy of 'Saudisation,' which was aimed at encouraging the Islamic way of doing business and creating more employment/business opportunities for Saudi nationals.
In July 2000, SABB introduced ATMs in Riyadh and Makkah for the convenience of visually impaired customers. The first of its kind in Saudi Arabia, these ATMs allowed visually impaired customers to conduct transactions independently with complete privacy and security. In November 2000, SABB launched financial planning services which were similar to insurance policies. The bank offered two plans, Al Amal and Al Manar, aimed at helping customers plan for their future financial security. Under Al Amal, customers could take a policy for a specific amount for a specific duration. They paid a specified premium to the bank, which was credited to an Education and Protection fund. The amount in this fund was withdrawn by the customer at the maturity of the policy or after death, whichever occurred earlier...
Focus, Focus, Focus
SABB's efforts towards introducing a new, unique banking experience to Saudi Arabian customers were rewarded not only through improved financials but also through growing clout in the country's business scenario. In 2002, SABB was ranked 10th among the top 100 companies in Saudi Arabia, an improvement from its 12th rank in 2000(Refer Exhibit V). Industry observers said that this achievement was indeed noteworthy since SABB was the only bank from the medium-sized category to feature in the top 10 list. A customer survey conducted by SABB in early-2003 revealed that the Islamic banking products and services launched through the Al Amanah Banking division were very well received and enhanced customer satisfaction. This prompted the company to launch more such products: the Al Tomooh Account (May 2003) and the Al Mutamayazah Gold program (June 2003). The Al Tamooh Account was a savings account designed for children below 18 years. Though children could not operate these accounts, they were issued ATM cards on request, with appropriate guidance from guardians...
Exhibits
Exhibit I: SABB - Financial Highlights (1998-2002)
Exhibit II: SABB - Financial Highlights (2003 First Half)
Exhibit III: A Note on Saudi Arabia's Banking Industry
Exhibit IV: Top 10 Commercial Banks in Saudi Arabia
Exhibit V: A Note on Islamic Banking
Exhibit VI: Top Ten Saudi Arabian Companies (2001)
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