Regulatory Alerts2022-06-16
Related Parties Rules for Banks
The Saudi Central Bank (SAMA) has issued updated rules mandating that all locally incorporated banks and foreign branches operating in Saudi Arabia strictly regulate exposures to related parties, including substantial shareholders, board members, senior executives, and their relatives. These regulations establish a 5% exposure cap for non-bank related parties, a 10% limit for listed companies, and a cumulative 50% cap against the bank’s eligible capital base, while requiring all transactions to be conducted on an arm’s length basis and secured where control relationships exist. Banks must implement robust governance frameworks to monitor these exposures quarterly, report any transactions exceeding 5% of eligible capital within thirty days of each quarter-end, and ensure full compliance by September 1, 2022.