| 8.1 | Banks should obtain SAMA non-objection on investments that require regulatory approval based on the Banking Control Law and Ministerial Decree No. 3/2149, such investments will be approved on a portfolio level. Any changes in these investments’ structure or limits (increase or introduce new limits) will require prior non-objection from SAMA.
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| 8.2 | Banks should clarify in their policies the investment channels and approval requirement for each investment product, including that investing in Money Market Funds (MMFs) must be through entities that are licensed by the relevant authority (i.e. the Capital Market Authority “CMA”) and must comply with its Regulations. Such investment must also comply with the following conditions:
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| | ■ | Saudi riyal-denominated funds must be invested exclusively in the onshore Saudi market.
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| | ■ | The minimum credit rating requirement for any MMF set by SAMA.
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| | ■ | The custodian of the MMF must be licensed and regulated.
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| | ■ | The lending or placement of Saudi riyal-denominated funds, directly or indirectly, is restricted to banks and financial institutions regulated by SAMA or CMA, respectively. Doing otherwise requires SAMA’s prior approval.
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| 8.3 | The request for obtaining SAMA non objection must at least include the following:
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| | ■ | Confirmation of the Board of Directors or its delegated authority approval of the Bank’s Investment Strategy, including investment limits, risk tolerance and allocations for hedging and trading purposes.
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| | ■ | SAMA’s last non-objection on investment limits.
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| | ■ | Existing approved limits and utilization amount.
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| | ■ | Detailed description of each asset class of the outstanding and proposed investments, which includes the followings:
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| | | - | Strategy for each asset class.
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| | | - | Ratings (Country issuer instrument) as applicable.
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| | | - | Book value.
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| | | - | Market value.
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| | | - | Expected annual growth rate.
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| | | - | Projected exposure amount for 3 years (Year-end).
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| | | - | IFRS9 ECL staging classification, if applicable.
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| | | - | Asset category in terms of fair value measurements (level 1, level 2, and level 3) as described in IFRS13.
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| | | - | Asset category in terms of liquidity (High quality liquid assets (HQLA) level 1, level 2a or 2b).
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| | | - | Revised investment limit.
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| | | - | Economic sector of security issuer.
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| | | - | Geographical distribution.
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| | | - | Currency of denomination.
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| | | - | Risk Weighted Asset for Credit Risk, Market Risk or Operational Risk.
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| | ■ | Impact assessment on SAMA regulatory ratios including (Liquidity Coverage Ratio (LCR), Net Stable Funding Ratio (NSFR), Capital Adequacy Ratio (CAR), SAMA Liquidity Ratio (LR), Leverage Ratio) if limits are fully utilized.
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| | ■ | List and copy of all relevant approved policies and procedures, in particular for monitoring the portfolio performance.
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| | ■ | Risk assessment for the proposed investment portfolio.
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| | ■ | Details on the mechanism currently in place for reporting portfolio related to risks/developments to senior management and Board of Directors.
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| | ■ | The escalation process for any breach of the approved limits.
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| | ■ | Any other information SAMA may deem necessary for determining SAMA non-objection.
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| 8.4 | Banks should review the approved limits (no change/increase/decrease) to be in -line with the bank’s risk tolerance and market position at a minimum every three years.
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