Chapter 4: Capital Requirements
Minimum Capital Requirements
20. Every DTFC shall, at all times-
i. maintain records including balance sheets and periodic statements of income and expenditure to enable proper computation of the institution's capital adequacy of 20%; and ii. maintain the prescribed minimum capital requirements.
21. SAMA shall determine whether an institution is in compliance with the capital adequacy requirements in accordance with these Regulations.
Criteria for Higher Minimum Capital Ratios
22. SAMA may require higher minimum capital ratios for an individual DTFC based on, but not limited to the following criteria, if:
i. a DTFC has losses resulting in a capital deficiency; ii. a DTFC has significant exposure to risk; iii. a DTFC has a high, or particularly severe, volume of poor asset quality; iv. a DTFC is growing rapidly without adequate capitalization and risk management system among other resource needs as may be determined by SAMA; or v. there is a likelihood a DTFC may be adversely affected by the activities or conditions of its holding company (where DTFC is wholly owned by another institution).
On-Balance Sheet Items
23. Every DTFC shall assess and provide for risks in the evaluation of their respective capital adequacy measurement.
24. Every DTFC shall classify and assign risk weight to credit exposures into four categories according to their relative risk exposures, in the following manner-
i. zero weight should be assigned to the on-balance sheet items including cash, balances with SAMA, claims on the government of KSA by way of investments in government of KSA securities, loans fully secured by cash and loans duly guaranteed by government; ii. 20% weight, where deposits and balances due from commercial banks, financial institutions, DTFCs and claims (loans and advances) guaranteed by a multilateral development bank (MDB), a Regional Development Bank, or a development agencies; iii. 50% weight where loans are fully secured by a residential property located within cities and municipalities in KSA that are either occupied by the borrower or rented and; iv. 100% weight shall apply to all other claims on the public and private sector, which are not covered under the other categories and include- deposits in banks, financial institutions, mortgage finance companies and deposit-taking finance companies that are under statutory management; premises and other fixed assets, loans and advances, bills discounted and all other assets of these institutions.
Off-Balance Sheet Items
25. Every DTFC shall ensure that:
i. off-balance sheet items fully secured by cash or cash equivalent and those that are guaranteed by government of KSA shall be assigned 0% risk weight; and ii. off balance sheet items with the maturity exceeding a year are assigned a risk weight of 50%, including performance bonds and bid bonds.
Reports submitted to SAMA
26. Every DTFC shall prepare and submit to SAMA at the end of every month to be received by the 15th business day of the following month, reports on Capital to Risk Weighted Assets in the form set out in Appendix A to these Regulations.