Warsh's credibility rises on Wall Street as Bessent's slips

Several leading Wall Street advisory firms are defying Saudi Arabia's mandatory regional headquarters guidelines, asserting that the staffing prerequisites conflict with their operational frameworks, a Financial Times article revealed. Moelis, Rothschild, PJT Partners, and Evercore maintain Dubai as their principal regional base and have yet to obtain RHQ licenses, despite establishing offices in the Saudi capital.

The RHQ program, instituted in 2024, mandates companies to maintain at least 15 full-time staff at their Saudi headquarters within a year of acquiring the license. Without a regional headquarters in Riyadh, firms risk disenfranchising business from government entities, including the nation's $900 billion sovereign wealth fund. The staffing demands prove challenging for boutique firms that maintain streamlined structures compared to major international banks.

The RHQ employees must be senior executives engaged in managerial duties rather than directly generating revenue, amplifying operational expenses. Lazard ventured into the Middle East market by designating Riyadh as its regional base. Certain boutiques have sought clarification or exemptions from the Ministry of Investment, which administers the program.

A bank mentioned its application is on hold, while another indicated it might abandon plans to secure a license entirely. The ministry reported surpassing its 2030 objective of 500 companies, with 700 already registered, and 19 financial institutions obtaining RHQ licenses as of July, with another 30 in the pipeline. Capital markets and mergers and acquisitions activity in Saudi Arabia declined in the first half of the year, per Dealogic.

The kingdom's sovereign wealth fund, the PIF, was anticipated to conduct fewer international deals as it embraced a more inward-focused strategy, according to bankers.