Skip to main content
Back Custom print Text Only Rich Text Print / Save as PDF
Download Original PDF

  • 3. Funding Ratio (FR) Requirements

    • 3.1. Introduction

      56.Foreign Bank Branches (FBBs) are not required to maintain capital in Kingdom of Saudi Arabia although a quasi-capital in the form of a Funding Ratio requirement may be set on a case-by-case basis, for example, those intending to conduct high-risk businesses and/or wanting to specialise in particular business lines such as significant retail business operations that require specific level of capacity or competence.
       
      57.These requirements are applicable to FFBs that are engaged in significant retail activities in respect of their business in the Kingdom of Saudi Arabia (KSA).
       
      58.A significant retail FBB is, at a minimum, required to maintain at the greater of SAR one (1) billion or eight (8) per cent of FBB’s Total Risk Weighted Assets (Pillar 1 and Pillar 2 risks). The FBB must maintain the required Funding Ratio at all times, regardless of reporting frequency.
       
      59.The Pillar 1 Risk Weighted Assets shall be that of the KSA branch. The Pillar 2 RWAs shall be that assigned for the KSA business by the Head Office.
       
      60.SAMA may require a FBB to maintain additional assets where in the opinion of SAMA they are necessary to protect retail depositors of the FBB.
       

    • 3.2. Pre-Approved Assets for the Funding Ratio (FR)

      61.Only Securities issued or guaranteed by the Government of Saudi Arabia are pre-approved as qualifying assets for the Funding Ratio determination.
       

    • 3.3. Calculating the Funding Ratio (FR)

      62.The Funding Ratio is determined by total RWA. Total RWA is defined as Pillar 1 plus Pillar 2 RWAs (both on and off-balance sheet) of the FBB in respect of its business in KSA.
       

    • 3.4. Reporting

      63.At each quarter end, the FBBs that are subject to FR requirements are required to calculate and report to SAMA its Funding Ratio (FR) during the period using the attached Attachment D.The Returns should be submitted to SAMA (to relevant relationship manager of the FBB) by end of the month following the quarter end.