Regulatory Alerts2017-11-01
Step-in Risk
The Saudi Central Bank has issued final Guidelines for Management and Measurement of Step-in Risk, requiring all domestic banks to comply with Basel Committee standards on Shadow Banking oversight. The directive mandates enhanced risk assessment and capital allocation practices to mitigate systemic exposures, reduce liquidity impacts, and standardize cross-border regulatory approaches. Full compliance is emphasized to strengthen banking capital buffers and ensure consistent application of Step-in Risk protocols across the Kingdom's financial sector.
In the Name of Allah, the Most Gracious, the Most Merciful
Saudi Central Bank Headquarters
Banking Policy Department
Reference No.: Date: 1439/02/12 Attachments:
Ref No.: 391000016551
Circular
To: The Esteemed, Greetings,
Subject: Management and Measurement of Step-in Risk.
With reference to the Bank's Circular No. 381000084993 dated 1438/08/13H, which requested the Bank's comments and views regarding the Consultative Document issued by the Basel Committee on Banking Supervision (BCBS) on the Guidelines for Management and Measurement of Step-in Risk to enhance supervision and regulation of the Shadow Banking system and mitigate potential systemic risks associated with it.
We wish to inform you that the Guidelines for Management and Measurement of Step-in Risk have been issued in their final form. These guidelines aim to enhance the effectiveness of managing and measuring Step-in Risk, reduce its impact on bank capital and liquidity levels, ensure consistency in practices across countries, while taking into account the nature of these risks.
The Bank emphasizes the importance of compliance by banks and financial institutions with the Guidelines for Management and Measurement of Step-in Risk issued by the Basel Committee on Banking Supervision (http://www.bis.org/bcbs/publ/d423.pdf).
Yours sincerely,
Sulaiman bin Rashid Al-Jabr Acting Director, Banking Policy Department
Distribution Scope: All banks operating in the Kingdom
P.O. Box 2992, Riyadh 11169 | Telex: MARKAZI | Fax: 404400 | Tel: 4633000 | Fax: 4662414