U.S. bank Citigroup has received approval to establish its regional headquarters in Saudi Arabia's Riyadh, according to an internal memo seen by Reuters on Friday.

Riyadh has been looking to attract more companies to set up their regional headquarters in the kingdom by offering tax breaks as Crown Prince Mohammed bin Salman looks to wean the economy off oil by attracting foreign investment.

Saudi Arabia's new rules also mandate foreign firms to have regional headquarters in the kingdom or risk losing hundreds of billions of dollars in lucrative government contracts.

The Wall Street giant received the approval from the Ministry of Investment Saudi Arabia (MISA), according to the memo.

"This marks a significant leap forward for our franchise in Saudi Arabia and we look forward to our continued growth in the kingdom," Citi Saudi Arabia CEO Fahad Aldeweesh said in the memo.

Bloomberg News reported the development earlier in the day.

Wall Street titan Goldman Sachs also received a license in May to set up its regional headquarters in Saudi Arabia's Riyadh.

(Reporting by Arasu Kannagi Basil in Bengaluru and Tatiana Bautzer; Editing by Devika Syamnath)