Saudi central bank pulls billions from global asset managers, shifts funds to liquid assets, says report

Saudi Arabia's central bank has withdrawn billions of dollars from at least two global asset managers in recent months and redirected part of the money into higher-performing and more liquid investments, Bloomberg reported citing people familiar with the matter.

The withdrawals began before the outbreak of the Iran conflict, the news agency added, citing sources who said the moves included a multibillion-dollar redemption from passive index-tracking funds managed by one asset manager this year. The people requested anonymity because the information is private.

According to Bloomberg, the Saudi Central Bank, known as SAMA, has redeployed some of the capital into strategies that have delivered stronger returns. Part of the funds redeemed from one manager was reinvested into fixed-income products offering greater liquidity, people familiar with the matter told Bloomberg.

In response to Bloomberg’s queries, a SAMA spokesperson said the institution had been increasing allocations to global asset managers in international markets in recent quarters in line with the growth in the kingdom’s foreign reserves.

“Where mandates have been reallocated, they reflect outcomes from SAMA’s periodic portfolio review process, conducted in line with conventional investment management practices,” the spokesperson said.

Bloomberg reported that SAMA oversees hundreds of billions of dollars and serves as Saudi Arabia’s main reserve manager. Its portfolio is focused on liquid, low-risk international assets aimed at preserving capital and maintaining financial stability.

The central bank’s reserves are also critical to maintaining the Saudi riyal’s long-standing peg to the US dollar, a policy that has underpinned investor confidence during periods of market turbulence and swings in oil prices, Bloomberg noted.

Unlike Saudi Arabia’s Public Investment Fund, which focuses on strategic investments and large domestic projects, SAMA’s mandate centres on liquidity, diversification and capital preservation, according to Bloomberg.

Bloomberg also reported that Saudi Arabia’s

foreign reserves have risen during the regional conflict as higher oil prices boosted revenues and alternative export routes helped sustain shipments. At the same time, liquidity pressures have persisted in the domestic banking system due to heavy spending on the kingdom’s economic diversification projects.

Data compiled by Bloomberg showed that the average loan-to-deposit ratio of Saudi Arabia’s 10 largest listed banks stood at 101.8% at the end of March, nearly double the levels recorded by major Wall Street lenders such as Goldman Sachs Group Inc. and JPMorgan Chase & Co.

Separate data from the Saudi central bank showed that total credit extended by local banks to the kingdom’s public and private sectors reached a record 3.4 trillion riyals by the end of February, up almost 10% from a year earlier, Bloomberg reported.