2.1 Owned or Controlled Financial Entities
Effective from Jun 12 2006 - Jun 11 2006
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SAMA requires that owned or controlled entities and securities entities should be fully consolidated for Basel II purposes to ensure that it captures the risk of the banking group.
Banking groups are groups that engage predominantly in banking activities and, in some countries, a banking group may be registered as a bank.
Banks are also required to ensure minimum capital adequacy on a consolidated as well as standalone basis by ensuring that the Parent banks also meet the SAMA mandated capital adequacy regulation under Pillar 1 of the Basel guidelines. Going forward all banks would be required to make two sets of prudential returns for Pillar 1 Capital Computations, the first one on a consolidated basis and the other on a standalone basis.
(Refer to Paragraph 21 of International Convergence of Capital Measurement and Capital Standards – June 2006)