Implications of COVID-19 on the financial services sector in Saudi – ZAWYA

Implications of COVID-19 on the financial services sector in Saudi – ZAWYA

The economic impact of this perfect storm would outlast the outbreak itself, affecting government spending, its structural reform program (the Vision 2030 program would most like be recalibrated), and the long-awaited recovery of the private sector will reverse into contraction.. Some major hurdles exist for any further consolidation such as the lack of significant common shareholding structure within the banks.. Despite such deteriorating operating environment, I don't believe there is much room for further banks consolidation in the kingdom given the current landscape. Within financial services, I believe the insurance sector is ripe for some major consolidation accelerated by the current economic downturn.. The negative outlook would surely push for further consolidation the insurance sector, a sector that was already ripe for such consolidation pre-COVID-19 pandemic.. The Kingdom has 33 insurance companies, most of these firms are small, undercapitalized and barely profitable (10 were loss making last year)..