SABB launches Shariah Compliant supply chain finance solution

By Leandra Monteiro

The Saudi British Bank (SABB) launched a Shariah Compliant Supply Chain Finance (Payables Finance) Solution, the first transaction of its kind in the Kingdom. This is in line with Vision 2030 initiative to increase financing to the SME sector and to meet the customers’ needs.

The “Payables Finance” concept is based on buyer risk where seller is bearing the cost of discounting. This product gives suppliers access to funding based on the credit standing of their buyers and without using their own credit lines.

Majed Najm, Deputy Managing Director of Corporate and Institutional Banking at SABB commented, “This innovative solution comes within the bank’s continuous endeavours to contribute to achieving the Kingdom’s Vision and play our role as a major financial institution to stimulate economic and commercial growth”. Majed Najm added, “In addition to our approach to innovating quality banking products in the market, SABB is well positioned to leverage its local expertise and broad international presence through HSBC’s network to lead the market in order to support businesses in the Kingdom in line with Vision 2030.”

“This solution will open up new avenues to customers to better manage their budget by classifying payables as commercial without classifying them as financing in their balance sheets. It also gives the customer better opportunities to negotiate credit terms and prices with suppliers. Therefore, given the benefits to all parties, this structure is expected to be very popular, especially given the fact that its Shariah-Compliant,” Majed was quoted as saying.