Switzerland’s biggest bank UBS has received approval from the Capital Market Authority (CMA) to operate in Saudi Arabia.

Peter Burnett, chief executive for UBS Investment Bank in the Middle East and North Africa, said that the bank had received approval from Saudi authorities for its wealth management, asset management and investment banking businesses. “We will be operational in the course of this year, most probably after the month of Ramadan,” he said.

The world’s largest wealth manager will open an office in Riyadh which will be called UBS Saudi Arabia; some 20-25 staff will be employed.

UBS joins a growing list of Western banks boosting their presence in the booming Gulf Arab region, which is struggling to manage excessive liquidity from record oil receipts and a slowdown in the industrialized economies.

Burnett said “Saudi Arabia’s economy is robust and growing rapidly.” He also said that rising oil prices are contributing to wealth creation and UBS is prepared to create a strong client base in Saudi Arabia. He said the key areas of the bank will be advisory, capital raising, service in initial public offering (IPO) market and equity research.

In 2006, UBS obtained a license to open an office in the Dubai Financial Center. It has been active since the 1960s in the region, with a presence in Abu Dhabi, Bahrain, Dubai, Cairo and Beirut.

“As there is a growing demand for Shariah-compliant products in the region, UBS Saudi Arabia will also introduce such products in the region,” Burnett added.

Saudi Arabia accounts for about half the wealth management business in the region. The Middle East development moves came even as UBS is struggling to recover from the subprime crisis, which had forced it to write down over $37 billion in assets since the onset of the crisis last year.

John Fraser, chairman and chief executive of UBS Global Asset Management, said in a statement, “The CMA approval gives us the opportunity to extend our world leading position in wealth management in the region, but also brings us closer to our asset management and investment banking clients in the Kingdom of Saudi Arabia.”

He added: “With over 40 years’ experience in the region our decision to set up operations in Saudi Arabia is further evidence of UBS’s long-term commitment to the Middle East and marks yet another important milestone for the firm in this very exciting and significant market.”

UBS appointed Mohamed Sammakia as chief executive of UBS Saudi Arabia, subject to regulatory approval. Sammakia is currently managing director of UBS’s fixed income division and president of the Middle East region. Fraser will become chairman of UBS Saudi Arabia and Mohammed Al-Dhoheyan, currently CEO of the Development and Management House for Investments, will assume the role of vice chairman.

As part of its long-term expansion in the Middle East, UBS also announced yesterday that it plans to expand its regional Investment Banking Division (IBD) team by more than double by end of 2008 and establish regional coverage of Middle East stocks out of the UAE by end 2008.

“UBS has made an application to the Qatar Financial Center Regulatory Authority for a license to open and operate a branch in the Qatar Financial Center. This will not only further the firm’s strategy of increasing its footprint in the Middle East but will also provides UBS with access to the many opportunities within Qatar, which has both the highest GDP per capita in the world and one of the highest rates of economic growth,” the banks said.

UBS is present in all major financial centers worldwide. It has offices in 50 countries, with about 38 percent of its employees working in the Americas, 33 percent in Switzerland, 16 percent in the rest of Europe and 13 percent in Asia Pacific. UBS employs more than 80,000 people around the world.