Executives from a number of U.S. and European financial institutions will attend Saudi Arabia's marquee investment conference this week, a year after several high-profile bankers and financiers withdrew from the event due to concerns about doing business with the Saudi government as diplomatically sensitive news unfolded.

The planned IPO of Saudi Aramco, the kingdom's state-owned oil producer and the world's most profitable company, has renewed interest in the Future Investment Initiative being held this year from Oct. 29-31, according to analysts.

The suspected kidnapping of Saudi journalist Jamal Khashoggi at his country's consulate in Turkey overshadowed the FII in 2018, which prompted JPMorgan Chase & Co. CEO Jamie Dimon to pull out of the conference. Other executives also withdrew last year but many of them will attend this year's 'Davos in the desert' despite the Saudi prosecutor having since indicted 11 Saudi nationals for the murder of Khashoggi. The Saudi government denies that the royal family played a part in ordering the murder.

"I think that the guest list already tells us that the kingdom, and much of the world, is looking to turn a page on the Khashoggi affair in that we expect a much more senior profile of attendee this time round compared with last year, including the presidents of India, Brazil, U.S. treasury secretary, and top executives from a range of international firms, especially financials," said Richard Robinson, Middle East analyst at U.K.-based Oxford Analytica.

HSBC Holdings PLC, Standard Chartered PLC, BNP Paribas SA, Credit Suisse Group AG and Société Générale SA are among the banks absent from last year's event that are expected to be present at the 2019 edition in Riyadh.

"Back in 2018, many of the global financiers and tech titans conveyed the message that the optics weren't right, but they were still very interested in pursuing contracts and looking at opportunities in Saudi Arabia," said Robert Mogielnicki, a resident scholar at The Arab Gulf States Institute in Washington D.C.

'Litmus test for prestige and global outreach'

The FII was first held in 2017, with organizers claiming 3,800 delegates from around 90 countries attended as Crown Prince Mohammed bin Salman showcased plans to build Neom, a sprawling $500 billion project on the kingdom's Red Sea coast.

"It's the annual go-to conference on Saudi Arabia's investment opportunities and by virtue a litmus test for the kingdom's prestige and global outreach," said John Sfakianakis, chief economist and managing director at the Jeddah-based Gulf Research Center.

The government-run Public Investment Fund, which is both Aramco's sole shareholder and FII host, hopes to achieve a $2 trillion valuation for the sale of an initial 1% stake in Aramco. That would raise $20 billion, but such a valuation seems stretched based on current oil prices of about $62 a barrel for Brent crude, while the mid-September attacks on Saudi's oil plants caused its crude output to temporarily decline by half. That led Saudi to again delay the IPO.

"Many businesspeople believe that if [the banks] don't show up in a very visible and supportive way for the FII conference, they won't be in the running for some of these big contracts and for a very lucrative position in the forthcoming IPO," said Mogielnicki.

Aramco windfall

Aramco has hired multiple banks for roles in the IPO's first phase. These include UBS Group AG, Deutsche Bank AG, Barclays PLC, Morgan Stanley, Goldman Sachs Group Inc., Bank of America Merrill Lynch, Citigroup Inc. BNP Paribas, JPMorgan Chase, HSBC and Credit Suisse, plus local lenders National Commercial Bank and Samba Financial Group, according to media reports, with JPMorgan expected to play a lead role. As in 2018, Dimon will not attend this year's summit, according to the official program, though Carlos Hernandez, the U.S. lender's head of global banking, will attend.

At FII, HSBC CEO Noel Quinn and Goldman Sachs president and COO John Waldron will appear on the opening panel alongside Blackstone Group Inc. CEO Stephen Schwarzman, according to the program.

Our participation reflects 70 years presence in Saudi Arabia where through our shareholding in Saudi British Bank and our partnership in HSBC Saudi Arabia, we are the biggest international bank, employing more than 4,000 staff to support our customers as the country implements its economic reform and social development agenda," an HSBC spokesperson said.

BlackRock Inc. CEO Larry Fink, Credit Suisse CEO Tidjane Thiam and their counterpart at SoftBank Corp. Masayoshi Son, plus Schroders PLC Chairman Michael Dobson are also listed as speakers.

StanChart's Bill Winters is another notable inclusion in the 2019 line-up. His bank in February received a license to launch operations in Saudi Arabia.

Meanwhile, SocGen CEO Frederic Oudea, BNP Paribas Chairman Alain Papiasse, London Stock Exchange Group PLC CEO David Schwimmer and Standard Life Aberdeen PLC Vice-Chairman Martin Gilbert will also participate.

Credit Suisse, JPMorgan, LSE, Schroders and StanChart declined to comment about their attendance at the FII; while Goldman Sachs, SocGen, BNP Paribas, Softbank, Blackrock, Blackstone and Standard Life Aberdeen did not respond to requests for comment.

Challenges ahead

Saudi officials hope the Aramco IPO will kick-start the kingdom's economic transformation and enable greater diversification from hydrocarbons and related industries such as petrochemicals by providing seed funding for new initiatives.

"I’m sure there’ll be a flurry of multibillion-dollar deals announced and MoUs signed, although we should be circumspect about the prospects for the actual implementation of some of the kingdom’s flagship projects outside of the energy sector, notably in tourism and entertainment," said Robinson.