Investing.com - Several prominent Wall Street advisory firms are resisting Saudi Arabia's regional headquarters requirements, citing staffing mandates that do not align with their business models, according to a Financial Times report.

Moelis, Rothschild, PJT Partners and Evercore continue to use Dubai as their main regional hub and have not secured RHQ licenses despite opening offices in the Saudi capital. The RHQ program, which came into force in 2024, requires companies to employ at least 15 full-time staff at their Saudi regional headquarters within a year of obtaining the license. Companies without regional headquarters in Riyadh risk losing business from government entities, including the country's $900 billion sovereign wealth fund.

The staffing requirements pose challenges for boutique firms that operate with simpler structures than large international banks. RHQ employees must be senior executives performing managerial roles rather than generating revenue directly, adding to operational costs. Lazard entered the Middle East market by making Riyadh its regional base.

Some boutiques have sought clarification or exemptions from the Ministry of Investment, which oversees the program. One bank said its application was "on hold" while another said it might abandon plans to secure a license altogether. The ministry said it had exceeded its 2030 target of 500 companies with more than 700 already registered, and that 19 financial institutions had obtained RHQ licenses as of July with 30 more in the pipeline.

Capital markets and mergers and acquisitions activity in Saudi Arabia slumped in the first six months of this year, according to Dealogic. The kingdom's sovereign wealth fund, the PIF, was expected to make fewer international deals as it adopted a more inward-looking focus, bankers said.