Saudi banks’ investments in govt securities hit SR277bn

Saudi banks invested SR277 billion in government bonds and treasury bills by the end of November 2014, of which SR224.6 billion and SR52.4 billion were spent on treasury bills and government bonds, respectively, according to a financial report.
Treasury bills captured 81 percent of the banks’ investments in government securities whereas the remaining 19 percent went to government bonds by the end of November 2014, the report, filed and analyzed by Aleqtisadiah daily, said.
Month-on-month basis, the bank’s investments in treasury bills dropped by 2 percent compared to investments of Oct 2014 which stood at SR228.6 billion and SR53.7 billion for government bonds, the report said.
Saudi banks reportedly favored investments in the (short-term) treasury bills than (long-term) government bonds. It’s natural that the Saudi banks prefer short-term securities for carrying least risks and generating quick liquidity to run their cash flows, the report said.
Investments of the Saudi banks in government securities registered the highest records in Sep. 2014 totaling some SR289.4 billion, of which SR235.4 billion and SR54 billion went to treasury bills and government bonds, respectively, the report said.
Chronologically speaking, Saudi banks’ investments in government securities have steadily increased since 1993 when it was SR43.5 billion, then increased to SR150.7 billion in a 10-year period (2003), then jumped to SR209.9 billion in 2008 but dropped to SR154.2 billion in 2009 in the wake of the global financial crisis, the report said.
However, Saudi banks once again began to inject more funds in government securities as from 2011 and have continued to grow since then to reach SR228.7 billion in 2013 and SR277 in Nov. 2014, the report said.