Goldman Sachs became the first Wall Street bank to comply with Saudi Arabia’s Regional Headquarters (RHQ) program and secure a license to establish its Middle Eastern base in Riyadh. The kingdom’s new rules, which took effect on January 1, 2024, require companies to maintain a regional headquarters in Saudi Arabia with at least 15 employees, including high-ranking C-suite executives overseeing operations in other countries. To attract these firms, Saudi Arabia offers a 30-year tax break and the opportunity to continue doing business with its government entities, including its $1 trillion Public Investment Fund.

Announced in 2021 in a bid to limit “economic leakage,” a term used by the Saudi government to characterize state spending that benefits companies without a significant presence in the country, the RHQ program is part of the kingdom’s ambitious Vision 2030 plan, aiming to attract foreign capital, generate jobs for its young and educated workforce, and diversify the economy away from oil. Saudi Arabia’s non-oil revenues reached 50% of the GDP in 2023, the highest recorded share. Furthermore, the enforcement of the new regulations has intensified the kingdom’s competition with the United Arab Emirates, the leading commercial and financial hub in the Middle East. Traditionally, most global firms have managed their operations in the region from offices in Dubai while maintaining smaller offices in Saudi Arabia.

The strategy is working. So far, according to Minister of Investment Khalid Al-Falih, over 400 international companies have obtained regional headquarters licenses for the kingdom, including technology giants Amazon, Alphabet, Google and Microsoft, consulting and auditing firms like PwC and Deloitte, and consumer goods multinationals such as PepsiCo and Unilever. However, global banks have been more reluctant to relocate to Riyadh, citing concerns over the clarity of the overall regulatory environment and doubts about the Saudis’ readiness to accommodate the needs of a Western workforce unaccustomed to the nation’s strict social and cultural rules. Still, global banks are unlikely cede sole control of Saudi Arabia’s lucrative and relatively untapped market to Goldman Sachs for much longer.