Saudi banker to help market

Fahd bin Abdullah al-Mubarak Riyadh - Arabstoday Fahd bin Abdullah al-Mubarak, chosen on Tuesday as Saudi Arabia's new central bank governor, is a U.S.-educated former investment banker with financial markets experience that could help open the Saudi stock exchange to foreign investment. Mubarak, whose appointment by King Abdullah to head the Saudi Arabian Monetary Agency (SAMA) was a surprise, in some ways contrasts starkly with his well-respected predecessor Muhammad al-Jasser. Jasser, who took office in February 2009, was a long-term government official and central bank insider who began his career at the finance ministry in 1981, and served as the central bank's vice governor for almost 15 years. Mubarak comes from outside the central bank and is a private-sector, market-focused figure; he was previously chairman and managing director of Morgan Stanley Saudi Arabia, and has worked in management positions relating to investment management and corporate finance advisory services. He has also held the position of chairman of the Saudi stock exchange. Analysts said it was very unusual for a top central banker in Saudi Arabia to be appointed from outside the institution. So Mubarak's appointment may indicate a desire by the authorities to help the central bank deal with market reforms. "We could not have worked with a better person in Saudi Arabia who understands the Wall Street culture like he does his home country," said one banker who worked with Mubarak at Morgan Stanley. Another person who used to work with Mubarak said he had "an international way of thinking". Saudi Arabia has been considering a wider opening of its stock market, the biggest in the Gulf, for several years; currently, foreigners have only very limited opportunities to invest through indirect ownership and exchange traded funds that track indexes. There is no clear, public indication from Saudi authorities that restrictions will be lifted any time soon. Officials have said they want to move only gradually for fear of attracting destabilising inflows of speculative money, and with funds fleeing Western markets because of the euro zone debt crisis, reforms could be particularly risky at present. But expectations are growing. A senior executive of Saudi Arabia's Bakheet Investment Group said in October that he expected the kingdom to fully open its stock market to foreigners in the first half of next year. The central bank could play an important role in any opening of the market because it would likely be involved in monitoring and regulating capital flows into and out of the country. INFLUENCE Mubarak will head an institution which holds Saudi Arabia's massive foreign assets; SAMA possessed $518 billion in net foreign assets in October, according to the latest data. He is not expected to change the conservative way in which those assets, many of them in the form of U.S. Treasuries, are managed. The finance ministry sets policy for investing the country's oil wealth, analysts said. In any case, major decisions in Saudi Arabia are usually made collectively by the top leadership, so Mubarak may not operate with the same independence as some Western central bank governors. "Any of the appointed officials will stick to the general policy of the country. I don't think that the person's personality will reflect on the position," said Talaat Hafez, a member of the Saudi Economic Association, a business group. "He can develop and improve, but there is an overall policy that they stick to..." However, Mubarak will to some extent be a financial diplomat for Saudi Arabia, and his background appears to make him well-suited for this role. Earlier this month, he spoke at a Saudi-U.S. business forum in Atlanta entitled "Maintaining a Stable Global Financial System: Shared Responsibility", where he was quoted as saying that oil giant Saudi Aramco's huge investments in the petroleum industry would ensure global energy stability. Mubarak, who is from Saudi Arabia's oil-producing Eastern Province, played a role in the privatisation of Saudi Telecom, according to a brief biography provided by Morgan Stanley. He was also a member of the team which discussed the partial privatisation of Saudi Arabia's National Gas Industry with international oil companies. He served as a member of the Shura Council, a consultative body which advises the government on legislative matters, for six years during which he was the vice chairman of its economic and energy committee. Mubarak holds a doctorate of philosophy degree in business administration from the University of Houston in Texas; he also has a bachelor of science degree in civil engineering and master's degrees in business administration, engineering management, and accountancy and taxation. He started his career as assistant professor at the Saudi King Fahd University of Petroleum and Minerals