Scope of Application and Other Issues
| No: BCS 290 | Date(g): 12/6/2006 | Date(h): 16/5/1427 | Status: No longer applicable |
| Reference to Basel II Document | Areas of National Discretion | SAMA's Postion |
Reference to paragraph 24, 26 & 27 - Choice of rule between consolidation and deduction. All relevant financial activities will be consolidated, but, if not consolidated, deducted from capital. However, where subsidiary holdings are acquired through debt previously contracted and held on a temporary basis, are subject to different regulation, SAMA would require that the same are deducted from the Tier 1 capital base and Tier 2 Capital capital base in equal proportion i.e. 50% and 50%. SAMA will ensure that the entity that is not consolidated and for which the capital Investment is deducted meets minimum regulatory capital requirements of the concerned regulatory authority. SAMA 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 26 and 27 of International Convergence of Capital Measurement and Capital Standards – June 2006) | Yes | |
| 28 | Threshold for minority investments to be deemed significant and be either deducted or consolidated on a pro-rata basis. | Yes |
| 30 – 34 | Scope of application: Treatment of significant investments in insurance subsidiaries. | Yes |
| 43 | Excess provisions: Recognition of excess of total eligible provisions in Tier 2 capital upto 0.6% of RWA. | Yes |
| 49 | Flexibility to develop bank-by-bank floors. | Yes |