January 07, 2019

SAMA published guidelines that set out its licensing process for banks in Saudi Arabia. The guidelines and criteria apply to applicants seeking a license to carry on banking business in the Kingdom of Saudi Arabia under the Banking Control Law (BCL). The document outlines the general guidelines, the minimum criteria to be addressed by applicants, and the application procedures and the necessary information and documents to be submitted with an application.

These licensing criteria are applicable to all applicants, including foreign bank applicants intending to establish a foreign bank branch. SAMA will also assess the adequacy of capital for an applicant on a case-by-case basis depending on the scale, nature, and complexity of the operations as proposed in the business plan. Foreign Bank branches are not required to maintain capital in Kingdom of Saudi Arabia, although capital requirements may be set on a case-by-case basis—for example, specific requirements for those intending to conduct high-risk businesses and/or wanting to specialize in particular business lines that require specific level of capacity or competence.

The application process involves the preliminary consultation between SAMA and the prospective applicant to discuss the applicant’s plans to conduct banking business in the Kingdom of Saudi Arabia. SAMA will then review the application, post the submission of an application and relevant information, as detailed in the Licensing criteria and the application form. Foreign banks may apply to establish branches to carry on banking business in Kingdom of Saudi Arabia. For Foreign branches, references to "Applicant" means the parent entity. If any of the founders of a locally incorporated bank is a foreign bank, the foreign partner would also be subject to the requirements for the licensing of a foreign bank branch. Except as explicitly stated in the Prudential Standards of SAMA, foreign bank branches are subject to the same legislative and prudential requirements as locally incorporated banks. Although the prime responsibility for oversight of the Kingdom of Saudi Arabian operations of a foreign bank branch rests with local management and its head office as well as with the foreign bank branch’s home supervisor(s), the foreign bank branch is nonetheless required to submit its local operations to the prudential supervision and other statutory laws of SAMA.

 

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Keywords: Middle East and Africa, Saudi Arabia, Banking, Licensing Guidelines, Capital Requirements, Prudential Standards, Foreign Branches, SAMA

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