* Talal Al-Sayah from Riyadh
Saudi banks have fulfilled all Basel III decision on capital adequacy ratio. In fact, they increased the required rate at many stages approached the weakness before the decision is binding on all international banks by the end of 2019.
According to the Economic Reports Unit, based on SAMA data and financial statements of Saudi banks, the capital adequacy ratio for all Saudi banks was 20.89 per cent by the end of the first half of the current year 2018, while 10.5 per cent is required.
With regard to the capital adequacy ratio of each Saudi bank, AlJazira Bank's capital adequacy ratio stood at 27.10 per cent at the end of the first half, followed by Samba Financial Group with 23.33 per cent, then Alawwal Bank by 22.40 per cent, Saudi British Bank by 22.27 per cent, and then AlRajhi Bank by 22.26 per cent.
In addition, the Saudi Investment Bank's ratio was 21.31 per cent, followed by National Commercial Bank by 20.35 per cent, Alinma Bank with 20.25 per cent, Riyad Bank with 19.38 per cent, Bank AlBilad by 18.08%, and then Arab Bank by 16.90%.
Since the beginning in 1988, the Basel Committee has given fundamental importance to the adequacy of capital to be binding on all banks engaged in banking activity as an international or global standard that to indicate the financial position of the bank and strengthen the confidence of depositors in the perspective of deepening the solvency of the bank.
In Basel I, it was recognized that capital adequacy in the transitional phase of the Convention would be greater or equal to 8 per cent. The capital adequacy ratio is calculated by dividing the share regulatory capital on assets by Risk-weighted (Credit risk).
Four years later and at the end of the transitional period, which was renewed by the Committee, the ratio remained the same. However, it was added to risk (market risk.)
As in Basel II, the assessed ratio has not changed but has also been added to risk (operational risk.)
Basel III has gradually begun its work, from 2015 to 2018, and will enter into force definitively in 2019.
The Saudi Arabian Monetary Agency (SAMA) has confirmed earlier the readiness of Saudi banks to the requirements of the Basel III Committee before the mandatory period to cover liquidity 100 per cent, and to ensure that bank loans are not affected by the application of the criteria required by the Commission.
* Economic Reports Unit
