The Saudi Arabian Monetary Authority (SAMA) announced on 03 March 2020 that it had decided to cut the Repo rate by 50-basis points from 2.25% to 1.75% and Reverse Repo rate by 50-basis points from 1.75% to 1.25%. In the interests of preserving monetary stability, the Repo rate and the Reverse Repo rate were reduced by a further 75-basis points on 16 March 2020 from 1.75% to 1.00%, and 1.25% to 0.50% respectively.

On the same day that the UAE Central Bank had announced its TESS programme to assist the economic impact of COVID-19, SAMA announced its own Private Sector Financing Support programme with a total value of SAR 50 billion. The SAMA programme consists of three main elements, the first of which is ‘Supporting SME Finance’. This is to be achieved through: (1) a Deferred Payments Programme (depositing around SAR 30 billion in banks and finance companies to delay the repayments for a period of six months); (2) a Funding for Lending Programme (granting SAR 13.2 billion for banks and finance companies to grant loans to support continued business continuity and maintaining employment; and (3) a Loan Guarantee Programme (depositing SAR 6 billion to enable banks and insurance companies to relieve SMEs from finance costs). The other two elements of the SAMA programme include supporting the private sector in terms of their fees for POS systems and e-commerce for a period of three months, and assisting institutions affected by the precautionary measures implemented in the Holy Cities of Makkah and Medina. 

SAMA also announced to enactment of its own BCP on 16 March 2020, encouraging customers to utilize digital banking channels and instructing banks to also monitor the performance of digital banking processes. SAMA also instructed financial institutions on 18 March 2020 to set a maximum number of customers to be served at the same time according to branch size, and in order to ensure a safe distance between customers in waiting areas. SAMA-regulated institutions have also been instructed to check customers for fever upon entry and provide sanitizers for customers and staff. To further help prevent the spread of COVID-19, on 18 March 2020, SAMA has also increased the transactions limits on POS terminals requiring the entry of a PIN from SAR 100 to SAR 300. In a similar move on 25 March 2020, SAMA also issued its decision for licensed Payment Services Providers (PSPs) to raise the allowed top-up monthly ceiling limit for e-wallets up to SAR 20,000. It was also announced on 14 March 2020 that SAMA would be isolating all Saudi currency notes transferred to its branch from abroad through banks and money-transporting firms.  

The Board of the Capital Markets Authority (CMA) has taken several preventive measures to support participants in the financial market in these unprecedented times. The CMA issued a resolution on 16 March 2020, suspending the holding of physical General Assembly meetings for listed companies until further notice. However, General Assembly meetings may still be held virtually through contemporary technology.

The CMA also announced on 31 March 2020 the issuance of resolutions relating to the deadline for disclosing the board report and the annual financial information that ends on 31 March 2020. Under these resolutions, the CMA will not be applying the Procedure of Suspending the Trading of Listed Securities for one trading session after the statutory deadline expires, as required by the Listing Rules. These resolutions also state that the CMA will extend the statutory deadline to disclose the board report for listed companies whose fiscal year ends on 31 December 2019 for an additional month, provided that the listed companies submit their report before the end 30 April 2020. Although there is no issued announcement regarding disclosure of issuers’ financial information at this time, the CMA is currently considering how to address the deadlines for disclosing the issuers’ financial information for the publishing periods that are approaching. 

The Saudi stock exchange (Tadawul),  announced on 25 March 2020 a temporary reduction of trading hours effective from 26 March 2020 to ensure efficiency and fairness in the market during this exceptional period.

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Author

Abdulrahman AlAjlan is the Head of the Saudi Litigation Practice Group of Legal Advisors In Association with Baker McKenzie Limited. With 15 years of litigation and commercial experience, he represents clients at the Sharia Courts, the Board of Grievance, the SAMA Committee, Labor Committee, Committee for Negotiable Instruments and all other courts and tribunals. Abdulrahman has extensive arbitration experience, both as an arbitrator and also representing clients in arbitration proceedings.

Author

Robert Eastwood is a Corporate partner of Legal Advisors, Abdulaziz I. Al-Ajlan & Partners In Association with Baker McKenzie Limited, based in Riyadh. He specialises in initial public offerings and private placements and regularly advises international and local banks and financial institutions on cross border securities business, brokerage, custody, licensing and establishing business presences.

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Samir Safar-Aly is an English-qualified senior associate in Baker McKenzie's DIFC office in the UAE, focusing on financial crime and financial regulation for the wider MENA region from both an advisory and investigations perspective. Samir's expertise includes UAE, Saudi and wider international anti-money laundering (AML) and counter-terrorist financing (CTF) rules, anti-bribery and corruption laws (covering the GCC, UK and U.S.) and other areas of white-collar and financial crime. He also advises governments in Africa and Asia on public policy and legal and regulatory reform. Samir has particular expertise in financial and economic sanctions and regularly provides guidance on UN, U.S. (OFAC), UK, EU and GCC sanctions regimes and export-control issues across a wide range of sectors. With regards to financial regulation, Samir covers the GCC and wider Middle East and provides guidance on the cross-border marketing of financial services and products, conduct issues and license applications. He regularly advises the world's leading financial institutions, asset managers, as well as FinTech start-ups.

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Razan Hassan worked at Legal Advisors Abdulaziz Alajlan & Partners as a Co-op in 2016 and then re-joined in 2019. Razan advises both Saudi Arabian and foreign clients on a wide range of corporate and commercial transactions and general corporate matters, and advisory work including public M&A and capital markets transactions.

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