(Nov 25): Morgan Stanley got regulatory approval to locate its Middle East headquarters in Saudi Arabia, joining Wall Street rivals including Citigroup Inc and Goldman Sachs Group Inc in expanding their presence in the kingdom.

“Establishing a regional HQ in Riyadh reflects the growth and development of Saudi Arabia and is a natural progression of our long history in the region,” said Abdulaziz Alajaji, the chief executive officer for Saudi Arabia and the bank’s co-head of the Middle East and North Africa region, in a statement on Sunday.

Under new rules that came into force this year, firms must have a regional base in Saudi Arabia with at least 15 employees, including executives overseeing other countries, or risk losing business with the kingdom’s vast network of government entities.

The move is part of a plan by the Saudi government to cut down on what it calls “economic leakage”, a term it uses for state spending that can benefit firms in neighbouring business hubs, most prominently Dubai and Abu Dhabi.

Morgan Stanley has been present in Saudi Arabia since 2007, when it set up an equity trading business in Riyadh, and became one of the first international asset managers to launch a Saudi equity fund two years later.

CEO Ted Pick was among a host of executives and investors to speak at Saudi Arabia’s flagship Future Investment Initiative last month.

In recent months, BlackRock Inc and Lazard Inc have joined the ranks of firms granted HQ licenses in the kingdom, while State Street Corp has said it will apply for one.

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