Grand schemes • Chapter summary

In the financial sector, Saudi Arabia continues to make the strides with its ambitious plans, spearheaded by Crown Prince Mohammed bin Salman, to transform the kingdom’s financial sector into a developed ecosystem. As part of the huge economic reform plan within the Vision 2030, the financial goals include the development of the digital financial sector and the enabling of financial companies to support the growth of the private sector.

In January 2021, the sovereign wealth fund unveiled a five-year strategy, with the aim of doubling its assets to USD1.07 trillion and investing a minimum of USD40 billion a year into the domestic economy until 2025. The investment is expected to create 1.8 million jobs and contribute USD320 billion to the kingdom’s non-oil economy. Key to this plan is the growth of the financial sector with the fund also planning to grow its assets under management to over USD2 trillion by 2030.

This mass economic acceleration mirrors the activities of the financial and banking sectors. As a response to the pandemic challenge, the government moved swiftly to inject SAR50 billion in to the banking sector. According to new research from global professional services firm Alvarez & Marsal, Saudi Arabia’s top-listed banks have rebounded in the first quarter of 2021. Bank mergers are the order of the day in Saudi Arabia, as the Kingdom seeks to transform itself into a developed financial economy by 2030. A USD15 billion merger brought together National Commercial Bank (NCB), the country’s largest lender by assets, with local rival Samba Financial Group. The new organization renamed Saudi National Bank (SNB) on April 1 is the Kingdom’s largest bank by assets and market capitalization.

The signalling from this merger is clear; Saudi Arabia’s appetite to expand its financial sector, in spite of the pandemic, remains ravenous. Playing a crucial role, the Financial Sector Development Program (FSDP), launched in 2017, continues apace. In the last stage the program achieved an important milestone in having the Saudi Stock Exchange (Tadawul) join the global indices, FTSE and MSCI, which culminated with the IPO of Saudi Aramco in 2019. The next stage will hone in on strengthening support to the private sector and increasing financing of SMEs and look to build a thriving insurance sector.

While other gulf countries’ financial sectors have benefitted from an earlier start, the Kingdom’s efforts, ambitions, and the size of its economy place it in excellent stead to become a financial powerhouse in the region over the next few years.