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2.2.1 Subsidiaries and Significant Minority Interests in Insurance Entities

No: BCS 290 Date(g): 12/6/2006 | Date(h): 16/5/1427 Status: No longer applicable

SAMA requires that all subsidiaries and significant minority interest in insurance entities at 10% or more are to be excluded from banks capital at 50% from Tier-I, and 50% from Tier-II capital.

In addition, SAMA would not permit the recognition of surplus capital of an insurance subsidiary for the capital adequacy of the group.

(Refer to Paragraph 33 of International Convergence of Capital Measurement and Capital Standards – June 2006)

SAMA will ensure that majority-owned or controlled insurance subsidiaries, which are not consolidated and for which capital investments are deducted, are themselves adequately capitalized to reduce the possibility of future potential losses to the bank. SAMA, through the parent banks will monitor actions taken by the subsidiary to correct any capital shortfall and, if it is not corrected in a timely manner, the shortfall will also be deducted from the parent bank’s capital.

(Refer to Paragraph 34 of International Convergence of Capital Measurement and Capital Standards – June 2006)