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Saudi Arabia Trade and Company Formation - Opening a Bank Account
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From the establishment of your company to obtaining your visas and providing ongoing essential support services, we strive to offer our clients high-quality, innovative, and cost-effective services to ensure their business success in the Kingdom.
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Opening a bank account in Saudi Arabia can take longer than you might be used to in other parts of the world.
Investors should be aware that opening a bank account in Saudi Arabia can be a lengthy process. Therefore, they may want to budget enough money to tide them over for the first few weeks after they arrive.
Besides the obvious advantages of the Kingdom's geographical location and its easy access to Africa, Asia, and Europe, the Saudi government is making significant efforts to direct business to the Kingdom. The Saudi government launched the Vision 2030 initiative in 2016 to improve the Kingdom's investment environment, attract increased foreign investment, and encourage more domestic and international private sector participation in its economy. The Kingdom outlines some significant business incentives and opportunities to attract investors. The Vision 2030 initiative aims to increase the private sector's contribution from 40% to 65% of GDP.
Key Benefits:
World Company Setup provides professional consultancy and step-by-step guidance throughout the incorporation process in Saudi Arabia, ensuring good corporate governance from the very beginning and offering advice on common pitfalls to avoid.
The main steps to consider are the primary and secondary registrations, residency (Iqama) for the General Manager, authorization to hire employees, and opening a bank account. We can provide support throughout the entire process, including the initial legalization and attestation of necessary documents at the Saudi Embassy in the foreign investor's home country, all the way to the issuance of the Commercial Registration and entity portal registrations in the Kingdom.
Our physical presence in the Kingdom, combined with our strong regional presence in Dubai, Abu Dhabi, Bahrain, Doha, and Muscat in the Gulf region, and our global network of offices spanning Europe, Asia, and Africa, has enabled us to assist businesses from five different continents in establishing and realizing their commercial plans in the Saudi market.
The Commercial Registration (and supporting licenses) are issued by the Ministry of Investment of Saudi Arabia (MISA) and the Ministry of Commerce (MoC). MISA, formerly the Saudi Arabian General Investment Authority (SAGIA), facilitates investment opportunities for foreign and local businesses and individuals in the Kingdom of Saudi Arabia. As MISA is the registration authority, business licenses in Saudi Arabia may often be referred to as a MISA license or SAGIA license.
Registering through MISA (SAGIA) is the first step in starting a business in Saudi Arabia. Essentially, MISA is the gateway to gaining recognition and permission to operate in the Kingdom. The primary goal of MISA is to facilitate and promote both foreign and local investment.
The main commercial entities in the Kingdom include the Limited Liability Company (LLC), the Joint Stock Company (JSC), and a Branch of a foreign entity. However, the most common is the Limited Liability Company (LLC), which is permitted to have 100% Foreign Ownership through MISA.
It is the most popular form of legal entity and attracts the most interest and attention from foreign investors. Why? Because 100% Foreign Ownership is applicable from day one. This makes it attractive to foreign investors when compared to other 100% Foreign Ownership initiatives in the wider Gulf Cooperation Council region. However, some activities, such as Engineering and Consulting, require a Saudi National Shareholder to be active in the business and be a genuine 25% Shareholder.
MISA recognizes the following legal entities:
Saudi Arabia is the largest economy in the Gulf region and is increasingly becoming a more suitable destination for foreign investors and companies to capitalize on the growing Saudi market.
Recent regulatory changes in the Kingdom have significantly increased the appeal for company formation by allowing 100% foreign ownership through the Ministry of Investment of Saudi Arabia (MISA) platform.
However, this process can be arduous and time-consuming, and using a Kingdom-based Corporate Service Provider who can oversee the formation from initial registration to full operation will save time and money while you focus on business expansion goals and strategy. World Company Setup has its own on-the-ground World Company Setup and Operations support services team to assist with all critical government registrations and industry sector-specific regulatory approvals and is knowledgeable to fully assist in the KSA company formation process.
A limited liability company (LLC) is popular among foreign investors in Saudi Arabia (KSA), where the individual personal liability for each shareholder is limited to their contribution to the capital.
An LLC is one of the most common legal entity forms preferred by foreign investors when entering the Kingdom's market, and it is well-accepted and widely used.
The Ministry of Investment of Saudi Arabia (MISA) offers foreign ownership of a company in Saudi Arabia without a local partner and with minimal government restrictions. A MISA registration/license is required for the establishment of a business with 100% foreign ownership in Saudi Arabia.
It is now possible to establish a Single-Shareholder Limited Liability Company in Saudi Arabia (KSA) - this means a limited liability company (LLC) can be established by a single shareholder who holds 100% of the shares and has the rights and powers of the General Manager, the Board of Directors, and the General Assembly of Shareholders. This also means that the liability of the company - assuming its intentions and practices are appropriate - rests with the individual shareholders, limited to their contribution to the capital.
A Joint Stock Company (JSC) is arguably the most regulated type of company in Saudi Arabia (KSA), through the regulatory requirements for its establishment and the degree of control/involvement from the Ministry of Commerce and Industry (MOCI). The liability of a JSC belongs to each shareholder, limited to their contribution to the capital.
In Saudi Arabia (KSA), a sole proprietorship/establishment is referred to as an establishment.
This company type is suitable for small businesses. In an establishment, there is an individual/sole trader who has unlimited personal liability for the business, and the license is issued in their name – a corporation or legal entity cannot own the business. A sole proprietorship is not a legal entity and refers to the business owner who is personally liable.
The first step to opening a corporate bank account in Saudi Arabia is to arrange the necessary documents. These include:
Choose the Right Bank
Once you have selected your bank, you will need to submit the necessary documents to the bank. The bank's compliance department will review them to ensure they are in order. The bank will also conduct a background check on the company and its managers.
Sign the Agreements
Once the bank is satisfied with the documents, you will be asked to sign the necessary agreements. These agreements include the terms and conditions of the account, as well as the bank's compliance policies.
Deposit Funds into the Account
The final step is to fund the account. This can be done by transferring money from another bank account or by depositing cash. Once the account is funded, the bank will provide you with the necessary information and documents to access the account.
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Before opening a corporate bank account in Saudi Arabia, you need to fully understand the regulations and requirements set by the Saudi Central Bank. Banks in Saudi Arabia will open accounts if the necessary documents are submitted and certain conditions are met. The process of opening a bank account requires patience and perseverance, but it can be achieved with the right approach and a reliable partner.
World Company Setup is your trusted business partner, offering corporate solutions for all your business needs. With our help, you can open your bank account smoothly and run your business in a compliant manner.
Home to more than 30 local and international banks, expats have a wide variety of options to choose from when opening a bank account in Saudi Arabia. The four local banks in the Kingdom, including the National Commercial Bank (NCB), Al Rajhi Bank, Samba Bank, and Riyad Bank, accounted for approximately 57% of total sector assets in 2019. Saudi Arabia also has a number of international banks, including Emirates NBD, First Abu Dhabi Bank, Deutsche Bank, HSBC, Standard Chartered Bank, BNP Paribas, and the Industrial and Commercial Bank of China.
Most bank branches are easy to find in major cities and expatriate hubs and are often located in shopping malls or on main streets. All banks operating in Saudi Arabia provide services in English and Arabic.
Expats living in Saudi Arabia can manage their money using an overseas account; however, they may find it tedious and cumbersome. Most residents benefit from a local bank account in Saudi Arabia, especially for salary transfers.
Although the Saudi banking system is well-connected with other countries, local payees may be unwilling to transfer money overseas due to high fees. A local account also simplifies the process of getting a credit card and taking out a car or home loan in Saudi Arabia.
Since opening a bank account in Saudi Arabia can take several weeks, expats newly moved to the country should budget for a few weeks' worth of cash to cover their daily expenses. You will find it easy enough to withdraw cash using an international debit card at any ATM, but you can expect to be charged a fee for the transaction; up to 30 SAR. You will also be able to use an international credit or debit card for larger purchases (over 30 SAR). Retailers, especially in major cities, accept cards from networks like Visa and MasterCard. However, you may be asked to pay in cash for smaller transactions, such as taxi fares or grocery items. With expats making up more than 32% of the population, Saudi employers are accustomed to the comings and goings of residents. As a result, most companies have systems and processes in place to help new expats ease into Saudi life. You will also find that your HR department will easily approve a cash advance for your first or second salary. This is particularly useful for a deposit on your rent in Saudi Arabia, for example; especially if you are not receiving company accommodation.
You will need to be physically present in Saudi Arabia to open a bank account. This is because, in addition to other documents, your residence visa needs to be stamped in your passport.
The Saudi Arabian Monetary Authority (SAMA), which regulates banking activities in Saudi Arabia, stipulates that banks cannot charge customers for opening new accounts. This service is provided free of charge.
As an expatriate, you have options for different types of bank accounts in Saudi Arabia, and these can vary from bank to bank. Keep in mind that the benefits accompanying a specific account type at one bank may not be the same as those found elsewhere.
Some of the basic bank account types include:
A current account allows you to perform traditional banking transactions, including depositing or withdrawing cash, issuing checks, paying and collecting checks, and paying recurring expenses like utility bills via phone or internet banking. You can also open a joint account with someone else.
Savings accounts allow you to save money for any period with a profit margin on the money deposited in the account. There can often be restrictions on the number of withdrawals from the account. Savings account holders generally cannot request a checkbook.
Term deposit accounts are for individuals who want to put their money to work for them and can save a significant amount of money for a specific period. They usually carry a higher profit margin than a savings account and are typically tied to a specific fixed deposit amount and a specific duration.
Many banks in Saudi Arabia offer exclusive and personalized banking services to women through ladies-only bank accounts.
Parents can open bank accounts for their children. They usually carry restrictions regarding the number of possible transactions but are a good way to teach children about finance.
Saudi Arabia Investment Accounts
Many banks in Saudi Arabia offer investment services. You can open an investment account by signing a fixed-term investment contract with the bank. These types of agreements cover the management of your funds with a minimum guaranteed return and usually require a minimum investment balance.
Many expats open offshore accounts while banking in Saudi Arabia, as it can be the most effective way to save, invest, and manage money while living abroad. Wealth managers and brokerage firms offer these services, but banks in Saudi Arabia also have connections with overseas facilities. Banks to consider include HSBC and Riyad Bank.
Expats looking to open a bank account in Saudi Arabia can choose from a variety of banking partners. It's a good idea to compare the products and services at different banks and then choose one that meets all your needs. In many cases, your employer may have a preferred banking partner; you may be asked to choose the same bank for your salary account. Doing so means it will be convenient for you on the day your salary is transferred.
However, in practice, it's worth remembering that you have many options when opening a bank account in Saudi Arabia. All of them have internet and mobile banking services and offer 24-hour phone banking options.
Also known as Al Ahli Bank, NCB was the first modern bank in Saudi Arabia, opening in 1953. With a paid-up capital of 30 billion SAR (8 billion USD), it is the country's largest bank by asset size. The bank offers current accounts and credit cards for retail banking customers.
Partially owned by HSBC, the bank's roots trace back to the British Bank of the Middle East, which was acquired by HSBC in 1959. SABB offers a range of personal banking and private finance products, including loans, mortgages, and credit cards. It also offers SABB Premier, SABB Advance, and Al Ruwaad Current Account.
The world's largest Islamic bank by capital, Al Rajhi is one of the largest joint-stock companies in the Kingdom. It has over 330.5 billion SAR in assets under management and over 600 branches. It offers current accounts, affluent accounts, private accounts, and ladies' accounts, as well as credit cards and personal, home, and auto loans.
Based in Dubai, Emirates NBD is one of the most advanced banks in the Middle East. It offers personal, priority, business, and corporate banking in Saudi Arabia. Its retail banking services include current accounts, term deposits, credit cards, auto loans, and ladies' banking products.
As with starting a business in Saudi Arabia, entrepreneurs and businesspeople will find that opening a bank account in the country is subject to strict controls and procedures. Companies operating in Saudi Arabia will need to open a capital account during the company registration process and deposit the required paid-up capital. This capital account does not require the appointment of a bank signatory and cannot be used for commercial activities.
It usually takes about 8 to 12 weeks for your commercial bank account to become operational. You will need the following documents, and many expat businesspeople find it makes sense to appoint a local business consultancy to assist them:
Not all banks in Saudi Arabia open accounts for children. Additionally, the banking services offered for these accounts vary greatly from bank to bank. Some may require hefty minimum balances and the maintenance of a certain balance each month before any profit is paid. Additionally, they may have limitations on the number of withdrawals, while others require no such thing.
In general, parents act as guardians for their children and can open accounts on their behalf, as they are effectively their sponsors. Regulations only permit fathers to open bank accounts for their children; they are considered their natural guardians or custodians under Sharia law. Mothers cannot open accounts on behalf of their children, even if they are legal guardians. Once an account is opened by a father on behalf of a minor child, the father can provide a Power of Attorney so that the mother can continuously manage the account without him.
The documents required to open a bank account for a child are:
SAMA regulations stipulate that banks cannot refuse to open accounts for legally resident expats - except under certain conditions. According to the authority, “Every natural or legal person has the right to open an account at any bank in Saudi Arabia. No bank has the right to refuse a request to open an account as long as it fulfills all the procedures and requirements for opening a bank account. This excludes some cases specified by SAMA.”
These conditions usually relate to whether the foreign national poses a risk to the bank; for example, those with a criminal record or those on some kind of international wanted list. However, in such cases, the foreigner would not have been granted a residence visa in the first place.
On the other hand, a bank may refuse to accept you as a customer if you do not provide documents confirming your identity, employment status, and the nature of your work. Additionally, customers may be refused for the following reasons:
Expats living in Saudi Arabia have access to a range of additional services from local and international banks operating within the country. You can choose to go with your current bank when purchasing these services or establish a relationship with a new bank. Many services are limited to salary transfer accounts, so you'll want to ask about those. Some services include:
Expats with a minimum monthly salary of 5,000 SAR are eligible for a credit card. Residents have a wide variety of payment cards that include airport lounge access, airline miles, dining discounts, and more.
As with banks in other parts of the world, anyone banking in Saudi Arabia is automatically entitled to a debit card. Such a card allows you to withdraw and deposit money at ATMs, as well as pay for purchases at a wide variety of stores and other retail establishments. ATM cards can be used at any ATM in Saudi Arabia, usually free of charge, as part of the Saudi Payment Network (SPAN).
Car loans are readily available in Saudi Arabia. Depending on the bank, expats may or may not be required to make a down payment for a vehicle loan. A 15% down payment is considered the industry standard when taking a loan from a bank to which you do not transfer your salary. The maximum repayment period is usually 60 months or five years.
Banks in Saudi Arabia offer personal loans to expat residents in various forms. These can be a cash loan on the back of a credit card or a more traditional bank transfer obtained on a branch visit. The maximum repayment period is 48 months or four years.
With an economy so heavily influenced by expats, it's easy enough to transfer money overseas via smartphones when banking in Saudi Arabia. Expat residents can usually transfer money to overseas countries easily with their smartphones. Many local banks have correspondent or partner relationships with institutions in other countries, so it's worth asking about them depending on where you want to move your money. Some banks offer free transfers to certain countries, such as India.
However, in general, banking institutions have high fees for sending or receiving money from Saudi Arabia. Therefore, it is often worth considering alternative money transfer solutions to banks, which are generally easier and cheaper. A number of foreign exchange companies, such as Mohammed Hasan Yala, Alamoudi Exchange, and Ersal Money Transfer, operate nationwide with branches in different shopping malls.
Additionally, there are several online services that offer the best rates. These include:
There are different ways to manage a bank account in Saudi Arabia. Whether through teller services at the branch or remotely, you can choose how to manage your money and finances with banks, such as:
Most Saudis and expats prefer to manage their finances from their smartphone devices. Almost every bank in Saudi Arabia offers most of its services through an app. You can manage your money, access services, and make various payments at the touch of a screen.
All Saudi banks offer internet banking services that give you 24-hour access to your money. Most services and products are also available online, and some banks now have live online chatbots to help you with any issues you may encounter.
If you change employers, you may want to switch to a different bank in Saudi Arabia. The availability of better products and greater flexibility are other reasons to change banks. However, you will first need to close all your existing debts at the first bank before you can transfer your relationship to a new bank. After closing your loans at the old bank, you will need to provide a 'no-liability letter' to the new bank, as well as an employer letter regarding the transfer of your salary to the new bank.
When it comes to closing a bank account in Saudi Arabia, your employer will notify the bank that you have resigned. At this stage, your account will be frozen, especially if you have outstanding loans. Therefore, it is wise to withdraw all your money after submitting your resignation letter to avoid being left in a difficult situation without cash. All loans must be settled before leaving the country, otherwise, you may be stopped at the airport.
You will need to visit a branch to close your bank account. Typically, you should do this after all your checks have cleared. Then, ask the bank for a liability letter, often called a proof of indebtedness certificate. This confirms that the account is closed and all debts are settled.
Unlike opening an account, Saudi banks are allowed to charge account closure fees; by law, these must be notified to customers within five business days. In practice, banks do not charge a closure fee, but expat banking in Saudi Arabia may be liable for other fees, such as for loans or financial products.
World Company Setup is a leading company operating in Saudi Arabia and offers a wide range of commercial services designed to help foreign clients enter the Saudi market and achieve success.
+90 542 381 3868
+971 58 5204103