MIDDLE EAST
* The U.S.Congress overrode a veto by President Barack Obama on legislation that wouldallow relatives of victims of the 9/11 terrorist attacks to sue Saudi Arabia,Reuters reported.The Justice Against Sponsors of Terrorism Act will now become law after theHouse of Representatives voted 348-77 and the Senate 97-1 to override the veto,the first such instance in Obama's presidency.
*Meanwhile, insiders toldBloomberg News that the bill could force Saudi Arabia to push back plans toissue its first international bond, of at least $10 billion, initially intendedfor next month.
* In a bidto lower borrowing costs, the Saudi Arabian Monetary Agency approximately 20 billionriyals with banks in the kingdom.
* TheTadawul All Share Index dropped 3.8% on Tuesday, the biggest drop sinceJanuary, after Saudi Arabia said it will limit state employees' allowances and cancel bonus payments as part of measuresto cut the kingdom's budget deficit.
* FitchRatings said largeSaudi Arabian lenders continue to report liquidity coverage ratios above 100%despite a 30% outflow of government-related deposits from the sector since oilprices fell sharply in November 2014, indicating that the banks' liquiditypositions, at least in the short term, are resilient.
* Fitchalso said sovereign willingness to provide support for banks in the GulfCooperation Council has remained "extremely strong." However,sovereign ability to provide support has diminished in SaudiArabia, Oman and Bahrain due to the slump in oil prices. Impaired loan ratioshave benefited from strong growth and loan restructuring, especially in theUAE, but are expected to worsen if oil prices remain at their current lowlevels for a protracted period.
*Saudi Hollandi Banknamed Abdullah Aloraini CFO, Reuters wrote.Aloraini previously served as head of accounting, asset and liabilitymanagement and investor relations at Saudi British Bank.
*Gulf Bank KSCP CEOCésar González-Bueno resigned due to personal reasons. His last day inoffice is Nov. 30.
* Chairman Ali Mousa al-Mousa said the government must first create a secondarydebt market before it can issue a sovereign bond, Reuters wrote. TheKuwaiti government intends to issue up to 3 billion dinars in U.S.dollar-denominated bonds and sukuk in international markets.
* IqbalKhan, head of Credit Suisse GroupAG's international wealth management business, said the Swiss groupexpects to expand in the UAE and Saudi Arabia to tap the potential of therising number of millionaires in the Middle East, accordingto Bloomberg.
* TheCentral Bank of Bahrain proposed new guidelines that would require Islamiclenders to conduct external Sharia audits of their operations, Reuters reported. Islamic banks in the Gulf regions have longpracticed self-regulation through internal boards of Islamic scholars.
* Iran thisweek introduced credit cards for the first time, Reuters wrote, citing the Iranian Students' News Agency.Central Bank of Iran Governor Valiollah Seif noted, however, that it would be"incorrect to think that these cards will be used quickly within thebanking network."
*Israel Discount BankLtd.'s offering of stocks and options saw of approximately 1.3 billionshekels. Israel Discount Bank raised roughly 700 million shekels in theinvestment institution stage.
*Bank Leumi le-IsraelBM will cut the annual salaries of Chairman David Brodet and CEO RakefetRussak-Aminoach to 2.5 million shekels each in 2017 as part of a newcompensation plan and in accordance with a new law capping executive salariesat financial institutions, Globeswrote.
*Separately, Bank Leumi agreed to sell 80% of a 2 billion shekel mortgage loanportfolio to Menorah MivtachimHoldings Ltd., Globes reported.The lender will keep the remaining 20%.
* Israelitax authorities arrested four diamond dealers over allegations that theyheld a total of 100 million shekels in unreported financial accounts inHSBC Private Bank (Suisse)SA. The arrests were part of an ongoing investigation into taxevasion at HSBC HoldingsPlc's Swiss arm.
NORTH AFRICA
* receivedregulatory approval to open a subsidiary in Chad, Jeune Afrique wrote. The approval brings to 14 the number ofAfrican countries where the Moroccan lender has a presence.
*Banque Marocaine du CommerceExterieur reported first-half net profit of 1.25 billion Moroccandirhams, up 18% on a yearly basis, Reuters reported. BMCE is working on setting up an Islamicbanking unit with Bahrain-based Al Baraka Banking Group BSC after the Moroccanparliament approved a bill regulating Islamic finance and sukuk issuances.
* TheMoroccan central bank kept its key rate unchanged at 2.25%. Inflation in the countryaveraged 1.6% in July and August, down from 1.9% in the second quarter.Governor Abdellatif Jouahri said Morocco will delay the implementation of aflexible currency regime until the second half of 2017, instead of the start ofnext year, to give the government more time to prepare for the changes, Reuterswrote.
* TheCentral Bank of Egypt maintained its main operation rate at 12.25%and the overnight deposit and lending rates at 11.75% and 12.75%, respectively.Headline year-over-year inflation stood at 15.47% in August, up from 14.0% amonth ago, while core inflation rose to 13.25% from 12.31%.
* Moody'ssaid Egypt's economic and fiscal conditions are gradually improving despite thelarge financing needs that the country faces. Noting that investor sentimenthas also improved, the rating agency said it expects a gradual decline in thecountry's high fiscal deficits and government debt levels.
* Algeriais considering relaxing rules on the privatization of banks in a bid todiversify the country's sources of financing amid the continuing oil priceslump, according to Financial Afrik. The country is lookinginto allowing state banks to list on the stock exchange to allow foreigninvestors to acquire controlling stakes in them, an insider told Reuters.
Henni Abdelghani and Pádraig Belton contributedto this report.