More than a week after Crown Prince Mohammed bin Salman arrested wealthy princes, officials and businessmen, in a power play that could reshape the oil-rich kingdom and the Middle East, bankers who’ve been discretely tending Saudi fortunes seem all but frozen.

Many are afraid to say, much less do, anything that might draw attention in Riyadh, where dozens of the kingdom’s richest people, including at least 11 princes, are being detained in the Ritz-Carlton hotel. Saudi Arabia’s market regulator has frozen the trading accounts of individuals being detained or investigated, according to three people familiar with the matter.

The reason is clear: Saudi authorities say at least $100 billion has allegedly been siphoned off over decades through corruption and embezzlement. How much of that money might have passed through global banks is anyone’s guess; no foreign institutions or business people have been accused of wrongdoing.

The official line from global finance, as much as there is one, was summed up on Nov. 8by Michael Corbat, the chief executive officer of Citigroup Inc. “We look at some progressive things happening there -- we’re encouraged by it,” he told the Bloomberg Year Ahead summit in New York.

That’s not quite the way many private bankers see things just now.

One senior banker covering the region said many Saudi clients are reluctant to speak via phone because they’re worried the lines might be tapped. His advice to clients and colleagues alike: sit tight.

Lay of the Land

Other bankers, also speaking on the condition of anonymity, tell similar stories. Many say business has ground to a halt for now.

Two senior bankers in the Middle East at global institutions said that they haven’t made any new loans or done other new business since the arrests were announced. They also said no Saudi companies have approached them for new business.

Caution is the byword. One banker based in Monaco said he canceled a planned visit to Riyadh in the immediate aftermath of the crackdown. Several other executives and investors said they hoped to fly in this month, between financial conferences in Dubai, to assess the lay of the land.

“Most of our members are taking a wait-and-see attitude,” said David Callahan, a vice president at the U.S.-Saudi Business Council, whose members include banks, oil companies and contractors.

Others are trying to get ahead of events. Over the past week, some hyper-wealthy Saudis have sold investments in neighboring Gulf Cooperation Council countries and moved the money to safer havens overseas.

Many billions of Saudi money is already managed offshore, and Switzerland, for one, wants to know if its banks might be exposed somehow. Finma, the Swiss financial regulator, is monitoring the developments in Riyadh, a spokesman told Bloomberg this week.

Bankers wonder if Crown Prince Mohammed, 32, will try to bring private fortunes home as he attempts to modernize the kingdom, reduce its dependence on oil and take public Saudi Arabian Oil Co., the state-owned giant known as Aramco.

“The young prince is moving through all of the issues that confront hundreds of years of tradition, led by a hundred years of dependency on oil and a family practice and policy that worked at the beginning of that great adventure,” billionaire investor Tom Barrack said in an interview in Dubai on Thursday. “Changing it takes disruption and I think that’s what we’re experiencing. None of us are well versed enough to know the details of that exactly.”

Bank exposure

Among major banks, Citigroup, Credit Suisse, JPMorgan Chase & Co. and UBS Group AG are some of the biggest managers of Saudi wealth. Citigroup’s private bank counts among its clients Prince Alwaleed bin Talal and Khalid al-Tuwaijri, former chief of the Royal Court, according to people familiar with the matter. Both men are among the detained.

With so much money at stake, financiers warn that the Saudi government is sensitive to which companies back them in difficult times, and stepping back now could hurt a firm’s chances of winning business later, according to the two senior bankers in the region.

Some executives are trying to channel the inherent optimism of global finance. One U.S. banking executive likened the developments in Saudi Arabia to post-Soviet Russia’s first chaotic steps toward capitalism. A U.S. private-equity executive drew comparisons to China, where President Xi Jinping has amassed extraordinary power in his bid to catapult the nation into the center of global affairs.

The developments haven’t discouraged SoftBank Group Corp., the Japanese company run by Masayoshi Son, from betting big on the kingdom. His firm plans to invest as much as $25 billion in Saudi Arabia over the next three to four years in a new city called Neom and state-controlled Saudi Electricity Co., according to people familiar with the matter.

Several other financiers said they hoped Saudi Arabia would eliminate red tape and speed lucrative deals. Aramco is the greatest prize.

The crackdown could “accelerate the privatization process as there is now total centralization of power,” said Emad Mostaque, London-based co-chief investment officer of emerging-markets hedge fund Capricorn Fund Managers Ltd. “The government has shown it is not afraid to shake up the status quo to achieve its aims to a degree that would have been unimaginable a few years ago."

— With assistance by Laura Colby, Vivian Nereim, Archana Narayanan, and Tracy Alloway

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