The Saudi Central Bank (SAMA) said it would implement the Basel III final reforms in Saudi banks from January 1, 2023.
The central bank’s move is in line with the internationally agreed timeline set by the Basel Committee on Banking Supervision (BCBS), the global standard-setter for the prudential regulation of banks, SPA reported.
SAMA said it also carried out a pilot application of Basel III, which was launched during the second half of 2022, with the participation of all Saudi banks.
The pilot application demonstrated initially the readiness of the banking sector for the official implementation, while maintaining stable capital levels.
The reforms, issued by the Basel Committee in December 2017, are intended to reduce reliance on the internal ratings-based approach (IRB) by banks.
It also aims to complement the risk-weighted capital ratio with a revised leverage framework and minimum outputs for calculating risk-weighted assets (Output Floors).
SAMA said it has updated the prudential framework for Saudi banks’ capital risks to align with these reforms as part of the country’s commitment to fulfill the expectations as a member of the G20.
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