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The financial industry was supposed to be the linchpin of “Vision 2030,” Crown Prince Mohammed |
When Saudi Arabia last saw a merger of two of its biggest banks, the oil price was recovering from a dramatic slump, the kingdom was in the midst of a deep recession and its debt exceeded the size of the economy.
That was in 1999, as Samba Financial Group joined forces with United Saudi Bank to create one of the largest banks in the country. Just over two decades later, Samba is once again at the center of consolidation as a year intended to showcase the progress of the kingdom’s transformation plan turns into one of the most testing in its recent history.
The financial industry was supposed to be the linchpin of “Vision 2030,” Crown Prince Mohammed bin Salman’s masterplan to wean the economy off oil. Global investors would put money into state assets being privatized and buy government bonds to help fund new projects. Domestic banks would lend to entrepreneurs and families to help them set up businesses and buy homes.
Instead, banks have joined their counterparts across the world in reacting to a raft of unforeseen challenges while the Saudi central bank has been forced to step in to shore up the financial industry. The collapse in oil prices coupled with the impact of the coronavirus outbreak has crippled Saudi Arabia’s revenue. Shutdowns of business activity remain in place as the authorities struggle to control the pandemic.
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