Regulatory Alerts2014-12-28
Finalized Guidance Document and Prudential Returns Concerning Net Stable Funding Ratio (NSFR) based on BCBS Document of October 2014
The Saudi Arabian Monetary Agency (SAMA) has issued its Net Stable Funding Ratio (NSFR) framework, incorporating General and Specific Guidance Notes and Prudential Reporting Templates based on the BCBS document of October 2014. Effective January 1, 2015, all banks are required to utilize this framework and submit quarterly Prudential Returns, with the first submission for data as of March 31, 2015, due by April 30, 2015. SAMA will issue further instructions on national discretions for specific items, and the NSFR will transition to a minimum standard by January 1, 2018.
9041010348
Saudi Arabian Monetary Agency
BANKING CONTROL
| From | : Saudi Arabian Monetary Agency |
| To | : All Banks |
| Attention | : Managing Directors, Chief Executive Officers and General Managers |
| Subject | : SAMA's Finalized Guidance Document and Prudential Returns Concerning Net Stable Funding Ratio (NSFR) based on BCBS Document of October 2014 |
الرقم : 361000036260 التاريخ : 1436/03/07 المرفقات :
A major initiative announced by the Basle Committee in the Basel III reforms package issued in December 2010 was related to Minimum Liquidity Ratio Standards to strengthen global liquidity regulations with the goal of promoting a more resilient banking sector.
In this respect, we refer to SAMA Circular # BCS 14522 of 8 February 2012, through which SAMA introduced the monitoring of the BCBS Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) based on the BCBS publication of the Liquidity Framework of 2010. This BCBS document indicated that both the LCR and NSFR will be subject to an observation period and will include a review clause to address any unintended consequences. It also indicated that after an observation period beginning in 2011, the LCR, including any revisions, will be introduced from 1 January 2015. The NSFR, including any revisions, will move to a minimum standard by 1 January 2018. Consequently, for monitoring purposes, Saudi banks have been providing their quarterly LCR and NSFR ratios to date since January 2012.
SAMA is now issuing its Net Stable Funding Ratio framework which incorporates General and Specific Guidance Notes as well as Prudential Reporting Templates based on the BCBS document of October 2014. This BCBS document of 2014 incorporate revisions to the 2010 document.
SAMA intends to issue further instructions with regard to the necessary National Discretions concerning item # 8 titled "Interdependent Assets and Liabilities" on page 15 and item # 9 titled "Off-balance sheet exposures" on page 16.
Consequently, effective 1 January 2015, Banks are expected to utilize the attached framework of Guidance Notes and Prudential Returns. These Prudential returns are expected to be submitted on a quarterly basis. Therefore, banks will submit their first quarterly Prudential Returns for data as of 31 March 2015 to be received in SAMA by 30 April 2015.
In line with the timeline specified in the 2010 publication of the liquidity framework, the NSFR will become a minimum standard by 1 January 2018.
P.O. Box 2992 — RIYADH-11169, Saudi Arabia — Tel : 01-463-3000 — Telex 404390 SJ — Fax 01-463-2090
Saudi Arabian Monetary Agency
BANKING CONTROL
The banks should access the BCBS document from BIS website: www.bis.org titled "Basel III: The Net Stable Funding Ratio" dated October 2014 for their reference and understanding.
[Signature]
Osamah Shaker Director General of Banking Control
P.O. Box 2992 — RIYADH-11169, Saudi Arabia — Tel : 01-463-3000 — Telex 404390 SJ — Fax 01-463-2090