An Analysis of Saudi Bankss Compliance with Basel III

Abstract

Basel III places stricter norms for the banks in terms of capital adequacy and risk management in order to overcome any type of financial crisis. The reforms include changes at the macro level and at the individual bank level. The complete implementation of the full set of reforms has been scheduled to 2019. However, the banks need to comply with and make arrangements to comply with the new standards. The banking system in Saudi Arabia, monitored by Saudi Arabian Monetary Agency, has been actively trying to enforce the reforms as per the agreed timelines. So far, the agency has introduced the leverage, liquidity and capital adequacy ratios. This paper mainly focuses on the extent of compliance of the banks in Saudi Arabia in light of the reforms introduced by Basel and as planned by SAMA. A sample of banks will be studied in detail for their compliance with the new norms. The results will be of significance to the banks as well as the regulator to assess the current state of compliance. Further the banks in other countries of the region will also benefit from the findings of the study.