Regulatory Alerts2014-02-24
Capital Requirements for Banks' Equity Investments in Funds
The Saudi Arabian Monetary Agency requires all domestic banks to implement the Basel Committee's final policy framework for calculating capital requirements on equity investments in funds held within their banking books. This mandate clarifies existing Basel II treatments by introducing three risk-sensitive methodologies—the look-through, mandate-based, and fall-back approaches—to better reflect underlying fund risks and leverage. Banks must evaluate their current exposures and apply the appropriate approach to establish compliant capital requirements effective 31 March 2014.
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