Saudi Arabia’s crown prince Mohammed bin Salman is driving a campaign to attract multinationals to move to Saudi Arabia from Dubai, in the neighbouring UAE, according to the Financial Times.
Further reports suggest the country’s sovereign wealth fund – the Public Investment Fund – plans to invest $40bn annually in its domestic economy over the next five years, including on development of the country’s flagship Neom city development, as it ramps up efforts to become a business hub in the region.
Under its Vision 2030 programme, Saudi Arabia has ambitious plans to boost its economy and diversify away from oil. However, there has been scepticism from some analysts about the deliverability of the country’s plans.
In banking terms, Saudi Arabia is home to four out of the region’s 10 largest banks. However, regional competition is fierce, with the three largest banks by Tier 1 capital located in Qatar and the UAE.
The drive to create so-called ‘megabanks’ has drastically shifted the region’s banking profits landscape in recent decades. Although Saudi Arabian banks continue to account for a large chunk of regional profits, representing 28.9% of pre-tax profits in the Middle East, it is no longer the region’s definitive banking leader.
UAE banks now account for 27.25% of the region’s profits, up from 10.86% two decades ago, and Qatar’s share of regional profits have increased from just 2.33% in 2000 to 15.05% in 2020. By contrast, Israel’s banks have seen their share of regional profits fall from 22.56% 20 years ago to 9.89% in 2020.
