1. Introduction
Effective from 2022-12-27 - Dec 26 2022
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| Basel Committee on Banking Supervision issued a document on Basel III: Finalizing post-crisis reforms in December 2017. Which includes the revised disclosure requirements that aims to enhance transparency by setting the minimum requirements for market disclosures of information on the risk management practices and capital adequacy of banks. This will enable market participants to obtain key information on risk exposures, risk management framework, adequacy of regulatory capital of banks, reduces information asymmetry and helps promote comparability of banks' risk profiles within and across jurisdictions. In addition, banks' Pillar 3 disclosure will also facilitate supervisory monitoring while strengthening incentives for banks to implement robust risk management. | |||
| Among the key revisions to the Pillar 3 framework include disclosure requirements related to: | |||
| a) | Credit risk, operational risk, the leverage ratio and credit valuation adjustment (CVA) risk; | ||
| b) | Risk-weighted assets (RWAs) as calculated by the bank's internal models and according to the standardised approaches; | ||
| c) | Disclosures related to the revised market risk framework | ||
| d) | Overview of risk management framework, RWAs and key prudential metrics; and | ||
| e) | Asset encumbrance; and | ||
| f) | Capital distribution constraints | ||
| This framework is issued by SAMA in exercise of the authority vested in SAMA under the Central Bank Law issued via Royal Decree No. M/36 dated 11/04/1442H, and the Banking Control Law issued 01/01/1386H. | |||
| This framework supersedes all circulars/instructions/rules related to Pillar 3 Disclosure Requirements previously issued by SAMA. | |||