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Middle East and Central Asia > Saudi Arabia

You are looking at 1 - 9 of 9 items for :

  • Type: Journal Issue x
  • Banks and banking; State supervision x
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Cover IMF Staff Country Reports
Saudi Arabia: Financial Sector Assessment Program-Detailed Assessment of Observance-Basel Core Principles for Effective Banking Supervision
International Monetary Fund. Monetary and Capital Markets Department
This paper discusses Detailed Assessment of Observance of the Basel Core Principles for Effective Banking Supervision for the Saudi Arabia Financial Sector Assessment Program. Saudi Central Bank (SAMA) has progressively updated its regulations and continued focus on this process will be important. SAMA’s responsibility for banking supervision is clearly set out in the law, although without clearly establishing the promotion of safety and soundness of banks and the banking system as an explicit or primary mandate. There is room to strengthen SAMA’s operational independence, accountability framework, transparency, and legal protection. Strengthening powers and updating regulations, along with developing internal guidelines, will help strengthen processes for licensing, transfer of significant ownership and controlling interest, and major acquisitions by banks. SAMA’s well-established risk-based approach would benefit from a review of the scope of application of supervisory oversight, tools, and reporting. Prudential requirements mostly apply (appropriately) at both a solo and consolidated level, but monitoring is in practice only at the domestic level.
Keywords:
IMF-World Bank Financial Sector Assessment Program; adequacy ASSESSMENT process; banking supervision department; banking control law; counter financing; Bank supervision; Credit risk; Anti-money laundering and combating the financing of terrorism (AML/CFT); Market risk; Operational risk; Global
Cover Departmental Papers
Assessing Banking Sector Vulnerabilities in the Gulf Cooperation Council in the Wake of COVID-19
Abdullah Al-Hassan
,
Imen Benmohamed
,
Aidyn Bibolov
,
Giovanni Ugazio
, and
Ms. Tian Zhang
The Gulf Cooperation Council region faced a significant economic toll from the COVID-19 pandemic and oil price shocks in 2020. Policymakers responded to the pandemic with decisive and broad measures to support households and businesses and mitigate the long-term impact on the economy. Financial vulnerabilities have been generally contained, reflecting ongoing policy support and the rebound in economic activity and oil prices, as well as banks entering the COVID-19 crisis with strong capital, liquidity, and profitability. The banking systems remained well-capitalized, but profitability and asset quality were adversely affected. Ongoing COVID-19 policy support could also obscure deterioration in asset quality. Policymakers need to continue to strike a balance between supporting recovery and mitigating risks to financial stability, including ensuring that banks’ buffers are adequate to withstand prolonged pandemic and withdrawal of COVID-related policy support measures. Addressing data gaps would help policymakers to further assess vulnerabilities and mitigate sectoral risks.
Keywords:
COVID-19; banking performance; corporates performance; sovereign-banks-economy nexus; bank asset quality; oil price shock; policy support; assessing banking sector vulnerability; C. bank assets quality; Financial statements; Commercial banks; Loans; Credit; Global; Middle East
Cover IMF Working Papers
Basel Compliance and Financial Stability: Evidence from Islamic Banks
Mohammad Bitar
,
Samy Ben Naceur
,
Rym Ayadi
, and
Thomas Walker
The paper provides robust evidence that compliance with Basel Core Principles (BCPs) has a strong positive effect on the Z-score of conventional banks, albeit less pronounced on the Zscore of Islamic banks. Using a sample of banks operating in 19 developing countries, the results appear to be driven by capital ratios, a component of Z-score for the two types of banks. Even though smaller on Islamic banks, individual chapters of BCPs also suggest a positive effect on the stability of conventional banks. The findings support the effective role of BCP standards in improving bank stability, whose important implications led to the Islamic Financial Services Board (IFSB) publication of new recommendations in 2015 to bring BCP standards in line with the Core Principles for Islamic Finance Regulation (CPIFRs) standards. Our findings suggest that because Islamic banks are benchmarked closely to BCPs, the implementation of CPFIRs should also positively affect their stability.
Keywords:
WP; BCP compliance; Islamic bank; bank stability; compliance index; BCP index; BCPs; CPIFRs; Stability; Islamic banks; conventional bank; bank type; Basel Core Principles; Bank soundness; Islamic banking; Bank regulation; Bank supervision; Global
Cover IMF Staff Country Reports
United Arab Emirates: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper discusses performance and risks posed by government-related entities (GREs) in the United Arab Emirates (UAE). GREs continue to be a major source of growth and development for the UAE, but they also pose significant fiscal and financial risks. GREs’ debt remains high in the UAE, although it is declining and remains actively managed. To mitigate GREs’ risks, the authorities should build on recent progress and develop an integrated approach, including implementing prudent fiscal policies, enhancing macro- and microprudential frameworks, controlling GREs’ borrowing and integrating them into the public debt management framework, and further strengthening corporate governance and transparency.
Keywords:
ISCR; CR; bank; debt; price; liquid asset; UAE growth model; export diversification index; GRE debt; bank customer; asset quality; containing GRE borrowing; return on assets; Oil prices; Liquidity requirements; Short term interest rates; Bonds; Exports; Global; Europe; Asia and Pacific; Middle East
Cover IMF Working Papers
Measuring Concentration Risk - A Partial Portfolio Approach
Pierpaolo Grippa
and
Lucyna Gornicka
Concentration risk is an important feature of many banking sectors, especially in emerging and small economies. Under the Basel Framework, Pillar 1 capital requirements for credit risk do not cover concentration risk, and those calculated under the Internal Ratings Based (IRB) approach explicitly exclude it. Banks are expected to compensate for this by autonomously estimating and setting aside appropriate capital buffers, which supervisors are required to assess and possibly challenge within the Pillar 2 process. Inadequate reflection of this risk can lead to insufficient capital levels even when the capital ratios seem high. We propose a flexible technique, based on a combination of “full” credit portfolio modeling and asymptotic results, to calculate capital requirements for name and sector concentration risk in banks’ portfolios. The proposed approach lends itself to be used in bilateral surveillance, as a potential area for technical assistance on banking supervision, and as a policy tool to gauge the degree of concentration risk in different banking systems.
Keywords:
WP; risk factor; concentration risk; Basel capital requirements; Pillar 2; Credit VaR; capital charge; bank portfolio; asset correlation; Basel capital framework; requirement formula; Credit risk; Credit; Asset valuation; Basel II; Vector autoregression; Global
Cover IMF Working Papers
Islamic Banking Regulation and Supervision: Survey Results and Challenges
Mr. In W Song
and
Carel Oosthuizen
The growing presence of Islamic banking needs to be accompanied by the development of effective regulation and supervision. This paper examines the results of the survey conducted by the International Monetary Fund to document international experiences and country practices related to legal and prudential frameworks governing Islamic banking activities. Although a number of countries have made considerable progress in creating legal, regulatory, and supervisory frameworks that accommodate Islamic banking, there are substantial differences. This paper also identifies a number of challenges faced by regulatory and supervisory agencies regarding Islamic banking.
Keywords:
WP; bank; Shariah compliance; conventional bank; supervisory authority; Banking supervision; Islamic banks; regulatory framework; internal auditor; Shariah compliance officer; bank distress resolution framework; banking product; bank resolution; Islamic banking; Capital adequacy requirements; Islamic banking supervision; Legal support in revenue administration; Market risk; Africa; Global; Sub-Saharan Africa; Europe; Asia and Pacific
Cover IMF Staff Country Reports
Saudi Arabia: Financial Sector Assessment Program Update—Detailed Assessment of Observance of the Basel Core Principles for Effective Banking Supervision
International Monetary Fund. Monetary and Capital Markets Department
This paper focuses on Saudi Arabia’s Detailed Assessment of Observance of the Basel Core Principles for Effective Banking Supervision. The banking sector is fairly concentrated around a few banks. The seven largest banks have a combined share of assets of 85 percent. The three largest banks have a combined share of about 45 percent, and the next four each have market shares exceeding 5 percent. The dominant shareholders of the three largest banks are government entities, the fourth largest is linked to a family business group, and the next three have ties to major international banks. Saudi Arabia implements International Financial Reporting Standards for banks, and insurance companies, and is served by the major accounting firms.
Keywords:
ISCR; CR; risk management; risk profile; Sama circular; Saudi bank; banking group; internal audit; guideline document; Sama official; Sama practice; Credit risk; Bank supervision; Legal support in revenue administration; Internal controls; Market risk; Global
Cover IMF Staff Country Reports
Saudi Arabia: Reports on the Observance of Standards and Codes
International Monetary Fund
Saudi Arabia’s Report on Standards and Codes has been examined. The Capital Market Authority (CMA) has made significant progress in establishing its supervision credentials, including issuing implementing regulations. The CMA approach to supervision is both risk-based and compliance-focused, and the cost of compliance needs to be a more central focus when establishing mandatory obligations. The CMA has general and broad powers for inspection and investigation, and it conducts full electronic surveillance of the market. The CMA has the authority to investigate potential violations and to bring enforcement action seeking civil and criminal penalties.
Keywords:
ISCR; CR; payment system; payment; bank; Sanya; Saudi Arabian Riyal Inter-Bank Express; CMA regulation; Sama core criteria; asset class; CMA staff; CMA approval; card payments switch; oversight function; Payment systems; Securities; Legal support in revenue administration; Mutual funds; Securities settlement systems; Global
Cover Policy Papers
Fourteenth General Review of Quotas - The Size of the Fund - Initial Considerations
International Monetary Fund
The FY 11–13 medium-term budget (MTB) presented in this paper brings to a close the three-year restructuring effort that began with the FY 09–11 MTB. It secures savings of $100 million in real terms while providing sufficient financing for structural operations and the Fund’s response to the global financial crisis. This budget has been crafted in a period of uncertainty regarding the final scope and duration of the financial crisis as well as the ongoing responsibilities that the Fund may retain even as the crisis unwinds. There is also uncertainty about new responsibilities that may result as a review of the Fund’s mandate is undertaken. Addressing these items will be part of the work agenda to be undertaken in the coming year.
Keywords:
PP; New Arrangement to Borrow; quota; reform; Fund resource; risk; quota resource; crisis prevention; commitment capacity; resource base; Fund commitment; NAB resource; fund lending; Moral hazard; Capital inflows; Liquidity requirements; Emerging and frontier financial markets; Global