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Saudi Arabia Adopts Precautionary Measures for Establishments Impacting Financial System

The new executive regulations come in parallel with the recent collapse of major US banks. (Asharq Al-Awsat)
The new executive regulations come in parallel with the recent collapse of major US banks. (Asharq Al-Awsat)
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Saudi Arabia Adopts Precautionary Measures for Establishments Impacting Financial System

The new executive regulations come in parallel with the recent collapse of major US banks. (Asharq Al-Awsat)
The new executive regulations come in parallel with the recent collapse of major US banks. (Asharq Al-Awsat)

Saudi Arabia is preparing to implement a new executive regulation for dealing with important financial institutions, the failure of which may negatively affect the financial system, as part of precautionary measures to confront local, regional and global economic and financial turmoil and crises.

The Saudi Central Bank (SAMA) announced on Tuesday, the launch of the draft Executive Regulations for the System for Handling Important Financial Institutions, requesting public reviews specialists, through a dedicated platform of the National Competitiveness Center.

As many US banks have witnessed collapses, affecting financial institutions around the world, Saudi Arabia sought to develop a plan to protect its economy from the repercussions of the failure of important financial institutions in the country.

In line with the new regulations, SAMA obliges the targeted financial institutions to submit a recovery plan in a specific form, which would include quantitative and qualitative indicators, in addition to the actions needed to restore their financial position.

The financial institution or group must review and update the recovery plan at least annually and within 90 days, in the event of a change to its organizational, commercial, operational or financial structure.

The new regulations also allow SAMA to develop a management strategy for an important financial institution or its financial group, if it is subject to the sole supervision and control of the central bank.

The central bank has the right to request information from the financial institution or group and any entity within the group, and to demand access to its employees or headquarters.

In all cases, as per the new regulations, the Central Bank shall avoid any significant negative effects on the financial system, and aim to ensure the continuity of the necessary activities of the major financial institution.

SAMA also directs to take action related to the requirements for adjusting the capital or financing structure, as well as the organizational structure, business lines and operational support arrangements, in addition to adjusting the strategy and treatment measures.

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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)

Saudi Arabia’s digital advertising sector is experiencing rapid growth, but a significant portion of its revenues is leaking to foreign platforms. To maximize the impact on the national economy, experts are calling for strategies to curb this outflow and redirect it to local channels.

The importance of retaining digital ad revenues lies in the substantial size of this market. It is estimated that approximately $1 billion in ad spent is lost annually to foreign platforms, representing a considerable loss to Saudi Arabia’s economy.

Dr. Ebada Al-Abbad, CEO of Marketing and Communications at Tadafuq, a Saudi digital advertising network, told Asharq Al-Awsat that the problem stems from the fact that although advertisers, products, and audiences are often local, the largest share of financial gains goes to foreign platforms. He estimated that 70-80% of the $1.5 billion spent on digital advertising in Saudi Arabia in 2022 went to global platforms such as Google and Facebook. This results in the national economy losing nearly $1 billion annually from this sector alone.

Al-Abbad noted that government agencies in Saudi Arabia also contribute to the outflow. He explained that public sector spending on digital advertising, intended to raise awareness among citizens and residents, frequently ends up on foreign platforms. Government spending makes up about 20-25% of the total digital ad market in the Kingdom, meaning hundreds of millions of riyals leave the country annually, weakening the local digital economy.

Al-Abbad argues that Saudi Arabia needs strong local digital ad networks to keep this revenue within the national economy. These networks would help create jobs, drive innovation, and promote cultural diversity in digital content. Developing local platforms would also enhance Saudi Arabia’s digital sovereignty by ensuring that data remains within the country and is not controlled by foreign entities.

Moreover, local networks would reduce dependence on international platforms, ensuring that the economic benefits of digital advertising remain in the Kingdom, he said, stressing that this would align with Saudi Arabia’s broader Vision 2030 goals, which emphasize building a robust, diversified economy driven by local industries and digital transformation.

Globally, the digital advertising sector is growing rapidly. In 2022, worldwide spending on digital ads reached $602 billion, and it is projected to hit $876 billion by 2026. In the Middle East and North Africa (MENA) region, the digital ad market grew to $5.9 billion in 2022, with Saudi Arabia’s market accounting for over $1.5 billion.

In other countries, the digital ad sector plays a crucial role in boosting national economies. For example, in the United States, the digital advertising industry contributed $460 billion to the GDP in 2021, about 2.1% of the total. In the UK, the sector accounted for 1.8% of GDP in 2022. This shows how important digital advertising can be in driving economic growth.

One of the key challenges facing Saudi Arabia’s digital ad sector is the dominance of global platforms like Google and Facebook, which control 60% of the global digital ad market, Al-Abbad told Asharq Al-Awsat. This dominance results in a significant outflow of revenue and allows these platforms to control digital data and content. He warned that this could undermine Saudi Arabia’s national sovereignty over its digital economy.

To counter this, he emphasized that Saudi Arabia needs to build competitive local networks that can retain a larger share of the market. This will not only keep more revenue in the country but also strengthen the Kingdom’s control over its digital data and content.