SAMA published additional licensing guidelines and criteria for digital-only banks in Saudi Arabia. These guidelines are applicable to digital-only bank license applications in Saudi Arabia. The guidelines must be considered as additional requirements to be met, along with the Banking Licensing Guidelines and Minimum Criteria published earlier by SAMA. The additional requirements are related to licensing conditions, capital and liquidity requirements, governance, technology and cybersecurity risks, independent assessment, outsourcing, exit plan, prudential and supervisory requirements, and consumer protection. SAMA has also published actuarial work rules for insurance and rules governing insurance aggregation activities.
Digital-only banks will be subject to the same set of prudential requirements as other banks. Digital-only banks are required to satisfy SAMA that their proposed risk management and control policies are adequate and appropriate for monitoring and limiting risk exposures as per section D of the SAMA Banking Licensing Guidelines and Minimum Criteria. Digital-only banks are required to follow the same principles of corporate governance for banks operating in Saudi Arabia as conventional banks. To apply for a digital-only bank license in Saudi Arabia, the following conditions must be met:
- The digital-only bank should be set up as a locally incorporated joint-stock company.
- A promoter should have experience and knowledge in the financial industry; appropriate technology-related experience; and financial capacity to support setting up the digital-only bank.
- An applicant must possess a team with adequate expertise to discuss relevant aspects of the application.
Along with the application, an applicant is required to present a clearly articulated business plan, covering as a minimum the IT infrastructure plan and innovative technologies that will be rolled out, the financial projections, the targeted segment, and the proposed products and services in line with the targeted segments. An applicant is also required to submit an Internal Capital Adequacy Assessment Plan (ICAAP) and an Internal Liquidity Adequacy Assessment Plan (ILAAP). SAMA will assess the adequacy of capital of applicants on a case-by-case basis considering the scale, nature, and complexity of the operations, as proposed in the Business Plan, ICAAP, and ILAAP of the applicants. SAMA may require the applicant to appoint a qualified and experienced third-party entity (assessor) to perform assessments on the specific technical areas such as the technology/cybersecurity arrangements at the expense of the applicant.
The actuarial work rules apply to insurance and reinsurance companies, their Boards of Directors and senior management, appointed actuaries or those who are entrusted to carry out the work on their behalf, Heads and staff of actuarial function, and actuarial services providers. The objectives of the rules are to regulate minimum standards of actuarial practice; for the role and responsibilities of appointed actuaries, along with the procedures for their appointment, for the actuarial function of insurance and/or reinsurance companies and for the authorization of actuarial services providers. The rules also aim to regulate responsibilities of the Board of Directors, senior management, and company regarding the appointed actuary and actuarial function. The rules governing insurance aggregation activities set out the requirements and controls necessary for granting the license to carry out online insurance aggregation activities in Saudi Arabia, in addition to the rules concerning the relationship between the insurance aggregator and insurance companies.
- Additional Licensing Guidelines (PDF)
- Actuarial Work Rules for Insurance (PDF)
- Rules Governing Insurance Aggregation Activities (PDF)
Keywords: Middle East and Africa, Saudi Arabia, Banking, Insurance, Licensing, Digital Banks, ICAAP, ILAAP, Cybersecurity, Governance, Capital Adequacy, Actuarial Function, SAMA
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.
The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.
In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.
In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.
EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).
ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).
EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.
BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.