The agreement is worth SAR 145 million (USD 38.7 million) and funded through SFD's Saudi Export Program (SEP) and will according to a SFD press release finance the bank to expand: "its activities in providing credit facilities for the Saudi exports via increasing its capacity to enhance the letters of credit submitted to it by foreign banks for the interest of the Saudi exporters. Additionally, the bank will also be providing pre and post-shipping financing as part of the SEP guarantee documents policyholders."
It is granted under the Saudi Export Program. The Saudi Export Program (SEP) is part of the Saudi Fund for Development and was established in 1999. The program promotes Saudi exports to contribute the country’s GDP and minimize the economic dependence of crude oil. In promoting export of Saudi goods the SEP can support 100% of the value of the eligible export transaction depending on risk and nature of the export. Parties benefiting from the SEP fall into one of the following: Saudi companies and establishments; foreign companies, entities or governments importing or purchasing of Saudi goods or services; or lastly local or foreign banks and financial institutions.
According to the Saudi authorities the “SEP has made good achievements by being able to approve export funding and guarantee facilities supporting about SAR 39 Billion (equivalent to US$ 10.4) Billion worth of exports reaching to about 68 countries. Such facilities include direct funding operations amounting to SR (12.7) Billion (ed. approx. USD 3.39 billion). In addition to that, the program has opened lines of credit with several foreign banks amounting to SR (3.5) million (ed. approx. USD 0.93 million).”
The Saudi Fund for Development (SFD) was established by Royal Decree No. M/48 of 1 September 1974. The Fund’s main objectives are to: “participate in financing of development projects in developing countries through granting of loans to said countries and to encourage national non-crude-oil exports by providing finance and insurance in support of such exports.