From Rise to Power:
The Success Story of the Saudi Banking Sector

Over the past decades, Saudi Arabia’s banking sector has undergone remarkable development, transforming from a system heavily reliant on foreign banks to a robust network of national financial institutions. Today, it stands as a cornerstone of the nation’s economy and a key player in the region.

Government Leadership: Driving the Transformation

The Saudi government played a pivotal role in this evolution, spearheading the localization of the financial sector and facilitating mergers to create stronger, more competitive banks. Under the reign of King Abdulaziz (1932–1953), the founder of modern Saudi Arabia, rising oil revenues spurred economic growth and increased trade, creating a need for financial institutions to regulate transactions and safeguard wealth.

The Early Years: Foreign Banks Lay the Foundation

Saudi Arabia’s banking history dates back to 1926, when the Dutch trading company Nederlandsche Handel-Maatschappij (NHM) opened its first branch in Jeddah. This, along with later entrants like the British Bank of the Middle East and the Indochina Bank, dominated the nascent banking sector. While these foreign banks addressed the country’s growing economic needs, their dominance underscored Saudi Arabia’s reliance on external actors.

The Birth of National Banks

The 1950s marked the beginning of a shift towards national control with the establishment of local banks such as the National Commercial Bank in 1953 and Riyad Bank in 1957. These institutions were designed to support the national economy and instill confidence in a locally governed financial system, reducing dependency on foreign entities.

Saudization: Transforming the Financial Landscape

A major turning point came in the 1970s with the introduction of a Saudization program, aimed at increasing Saudi ownership and control of the banking sector. Many foreign bank branches were converted into Saudi joint-stock companies. For instance, the Dutch General Bank branch became the Saudi Hollandi Bank in 1976, and the British Bank of the Middle East transitioned into the Saudi British Bank in 1978. This shift laid the groundwork for financial independence and empowered Saudi Arabia to build a banking system that reflected its national interests.

Mergers and Consolidation: Strengthening the Sector

In the 1990s and 2000s, Saudi Arabia witnessed a wave of bank mergers aimed at enhancing financial strength and consolidating assets. Notable examples include the merger of the Saudi Cairo Bank and the Saudi United Commercial Bank in 1997, and the more recent merger of the National Commercial Bank with Samba Financial Group in 2021. These consolidations, driven by the government’s Vision 2030 agenda, have created larger, more competitive institutions capable of driving economic growth and regional influence.

Exponential Growth in Bank Deposits

Government investments have significantly boosted the banking sector’s assets over the years. In the 1970s, deposits grew at an annual rate of 44%, driven by large-scale developmental projects. From an initial two billion riyals (500 million euros), deposits surged to 268 billion riyals (67 billion euros) by 2000, and further to 2.67 trillion riyals (667.5 billion euros) by mid-2023. Meanwhile, total banking assets reached 4.2 trillion riyals (1.05 trillion euros), underscoring the sector’s robust growth and stability.

Saudi Arabia’s Banking Sector: A Global Player

Today, Saudi Arabia’s banking system not only serves as the backbone of the national economy but also plays a crucial role in the broader Middle East and North Africa (MENA) region. Strategic government investments and policies have created a modern and globally competitive financial system. As Saudi Arabia continues to implement its Vision 2030 agenda and embrace digital transformation in the financial sector, it is poised to solidify its regional and international leadership in banking and finance.