London/Dubai — Just months after King Salman ascended to the throne, he presided over a cabinet meeting that would have a profound effect on the future of Saudi Arabia and the way the world’s top bankers view the conservative kingdom. Yet the decision taken inside the al-Yamamah Palace garnered little attention either inside, or outside, the country. Buried near the bottom of a 1,400-word statement was the news that the Public Investment Fund (PIF) would report to the newly created Economic and Development Affairs Council instead of the finance ministry. And the president of that council, Prince Mohammed bin Salman (MBS), would take over as PIF chairman. The meeting in March 2015 was an early indicator of the crown prince’s ambitions and the financial power the ageing monarch’s favoured son would soon come to wield. It marked the beginning of the radical transformation of the PIF from a near-dormant state holding company into arguably the world’s most active sovereign investment veh...

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