I. Introduction | SAMA Rulebook

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I. Introduction

No: 351000138356

Date(g): 6/9/2014 | Date(h): 12/11/1435

Status: In-Force

1.	The Basel Committee on Banking Supervision (BCBS) in November 2011 issued the rules text on the assessment methodology for global systemically important banks (G-SIBs) and the additional loss absorbency requirements over and above the Basel III requirements that have been introduced for all internationally active banks. The G20 leaders also asked the BCBS and the Financial Stability Board (FSB) to work on modalities to extend expeditiously the G-SIFI framework to domestic systemically important banks (D-SIBs).
2.	Accordingly, the BCBS developed assessment methodology to identify and designate D-SIB banks in the domestic economies of National Jurisdictions. In this context, the assessment methodology for D-SIB should reflect the potential impact of, or externality imposed by, a bank’s failure on the domestic economy and potentially any impact on cross-border externalities posed by the institution.
3.	In this regard, SAMA has developed an assessment methodology based on an indicator-based measurement approach for assessing and designating D-SIBs in Saudi Arabia that is consistent with the BCBS D- SIB assessment methodology. The selected indicators are chosen and calibrated to reflect the different aspects and operational dynamics of the Saudi Arabian Banking System that generates negative externalities and makes a bank critical for the stability of the financial system. Further. SAMA's assessment considers bank-specific characteristics of systemic importance such as size, interconnectedness, substitutability, and complexity, which are correlated with the systemic impact of failure.