Wall Street advisory firms push back on Saudi regional headquarters rules

The latest:

Specialist Wall Street advisory firms are resisting the staffing terms of Saudi Arabia’s regional headquarters program and are asking Riyadh for exemptions or looser conditions, the Financial Times reported. The main objection centers on a requirement to hire 15 full-time staff in management and leadership roles within a year of licensing. The Ministry of Investment says the program has already exceeded its 2030 target.

Details:

• The program: The regional headquarters scheme, known as RHQ, took effect in 2024 and was designed to pull global companies and their staff into Riyadh, strengthening the kingdom’s position as a financial center competing directly with Dubai, according to the Financial Times.
• The penalty: Companies operating in the region without a regional headquarters in Riyadh can be shut out of contracts with Saudi government entities. That includes the Public Investment Fund, whose assets stand at roughly $900 billion and which is the largest source of advisory mandates in the kingdom.
• The sticking point: The most contested condition requires 15 full-time employees within a year of licensing, filling administrative and leadership positions rather than revenue-generating roles. Smaller advisory firms say the rule is applied uniformly and ignores their business model, since they run lean structures with few administrative staff.
• Who complied: Lazard has designated Riyadh as its regional headquarters. Moelis, Rothschild, PJT Partners and Evercore still run their regional operations out of Dubai, even though each has opened an office in the Saudi capital, the Financial Times reported.
• The requests: Several firms have approached the Ministry of Investment seeking clarifications or exemptions. One company’s application has been frozen, and another is weighing abandoning the license altogether, according to the report.
• The numbers: The Ministry of Investment says more than 700 regional headquarters have registered against an initial target of 500 companies, putting the program ahead of its 2030 goal. As of July, 19 financial institutions held licenses, with about 30 more at various stages.
• The timing: The hesitation coincides with a slowdown in Saudi capital markets and merger and acquisition activity in the first half of the year, alongside expectations of fewer overseas deals by the Public Investment Fund — both shrinking the fee pool that would justify the added cost.
• The wider strain: The regional war has pushed the Saudi government to reassess spending and investment priorities, making firms more cautious about absorbing additional costs inside the kingdom, the Financial Times reported.
• The bottom line: Bankers are hoping for a more flexible approach, particularly after former HSBC banker Fahad al-Saif was appointed investment minister. The firms maintain Saudi Arabia will remain an important market and say they want to expand there, though not necessarily under the program’s current structure.

Between the lines:

The registration count and the resistance measure different things. Hitting 700 headquarters against a 500 target says the rule works on firms with large administrative staffs; the holdouts named — Moelis, Rothschild, PJT Partners, Evercore — are precisely the lean-structure houses the 15-employee threshold was never calibrated for. With deal flow down and PIF spending under review, the contract exclusion that gives the rule its force is worth less this year than last.

What’s next

Watch whether the Ministry of Investment under Fahad al-Saif grants exemptions or revises the 15-employee threshold, whether the frozen application is revived, and how many of the roughly 30 pending financial institutions complete licensing.