As a result of certain queries by Saudi banks on the enforceability of the following SAMA circulars related to Basel II, II.5 and III, SAMA wishes to provide the following clarifications:
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Banks are required to take note of the following:
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| (1) | SAMA on June 6, 2006, had issued regulations titled "Detailed Guidance Document Consultative Draft No 2, 2006", covering matters pertaining to Basel II. Since that date, for the purpose of Basel II implementation, this document should be considered as final and binding. The title of the aforementioned document was subsequently amended to "SAMA Detailed Guidance Document Relating to Pillar 1, June 2006".
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| (2) | SAMA on March 22, 2007, had issued regulations titled "SAMA - Basle II Prudential Returns Consultative Draft No 2", covering matter pertaining to Basel II, Prudential returns. The title of the aforementioned document was amended to "Prudential Returns Basel II, March 2007", this document should be considered as final and binding since the date of issuance.
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| (3) | SAMA has issued circular No BCS 769 titled "Enhancements and Revisions to the Basel II Framework, Market Risk and Trading Book", dated July 29, 2009 requiring banks to establish necessary policies, systems and processes to enable them to meet the Basel requirements pertaining to:
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| ■ | Enhancement to the Basel II Framework, July 2009
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| ■ | Revisions to the Market Risk Framework (subsequently updated as of 31st December, 2010) and intimated by BCBS in February, 2011
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| ■ | Guidelines for Computing Capital for Incremental Risk in the Trading Book
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SAMA confirms that all the regulations identified above were to be implemented and were binding on banks from the date of the original issuance.
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| 4) | SAMA has issued circular No. BCS 28548, titled "Treatment of Trade Finance under Basel Capital Framework" dated 21 November, 2011 requiring banks to be fully aware of this document.
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SAMA wishes to clarify that the guidelines mentioned in its circular, should be implemented and considered binding on banks from the date of the issue.
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