SAMA expects banks choosing the standardized approach and the simple operational risk approaches to implement the Basel II requirements by 1^st January, 2008

Banks planning to use the IRB approach together with any of the permitted operational risk approaches would be expected to conduct parallel runs.

SAMA expects different data quality standards for the initial stage parallel run compared to the subsequent stage parallel run; Banks would provide information during the initial year of the parallel run on a best efforts basis. However, for the subsequent stage parallel run information should be of sufficient quality to represent a meaningful dress rehearsal of the Banks IRB approaches.

For the initial year, Capital requirements for Banks using the Foundation Approaches would be 95% of Basel I, and 90% and 80% for each of the following year. For the AIRB credit risk or AMA operational risk would be subject to a floor set at 90 percent of Basel I. However, for the following year, capital requirements would be subject to a floor set at 80 percent of Basel 1;

However, SAMA based on its bi-lateral discussions with the Banks may establish such floors on a bank to bank basis.

SAMA recognizes that there may also be some limited circumstances where certain exclusions from IRB rollout continue to be warranted. For example, where it can be demonstrated that for asset classes and/or business units operating in jurisdictions where the reliability of the legal framework for collection of defaulted debts does not support the development of robust data for credit risk estimates, SAMA would consider these exemptions. Consequently, SAMA would create a “limited waiver mechanism” to permit Banks to come forward with proposed exceptions of this type, which would then be considered on a case-by-case basis, including an assessment of materiality, with SAMA retaining the right to approve or decline such waivers in its sole discretion.