Tough rules protected Saudi banks
Thursday, 20 May 2010
RIYADH, May 19 (AFP): Strict monitoring and capital requirements helped Saudi banks skirt the worst of the global financial crisis, central bank chief Mohammed al-Jasser said yesterday.
"By virtue of our conservatism, our financial and banking system was spared the worst effects of the recent market turmoil," he said.
"In Saudi Arabia, our banking sector is the least leveraged in the GCC," he added, referring to the six-member Gulf Cooperation Council.
Jasser, governor of the Saudi Arabian Monetary Authority, said stringent capital requirements had left Saudi banks with strong capital bases and provisions set aside for 90 per cent of non-performing loans.
"The fact that our banks have increased provisions is a sign of their ability to clearly recognise losses and hence strengthen their balance sheets for the resumption of normal business in 2010."
Jasser, speaking at the Euromoney Saudi Arabia Conference in Riyadh, criticised "laxity in regulation and supervision" and a focus on small details and not the big picture by financial authorities in other countries as key reason for the financial crisis.
"The existing framework of banking regulation is insufficiently macro- prudential," he said.
Meanwhile Saudi Finance Minister Ibrahim al-Assaf said at the same venue the country continued to spend heavily on capital projects to boost growth.
"The Saudi government continues to implement its investment programme in an effort to stimulate growth and create additional job opportunities for its citizens," he said.
"By virtue of our conservatism, our financial and banking system was spared the worst effects of the recent market turmoil," he said.
"In Saudi Arabia, our banking sector is the least leveraged in the GCC," he added, referring to the six-member Gulf Cooperation Council.
Jasser, governor of the Saudi Arabian Monetary Authority, said stringent capital requirements had left Saudi banks with strong capital bases and provisions set aside for 90 per cent of non-performing loans.
"The fact that our banks have increased provisions is a sign of their ability to clearly recognise losses and hence strengthen their balance sheets for the resumption of normal business in 2010."
Jasser, speaking at the Euromoney Saudi Arabia Conference in Riyadh, criticised "laxity in regulation and supervision" and a focus on small details and not the big picture by financial authorities in other countries as key reason for the financial crisis.
"The existing framework of banking regulation is insufficiently macro- prudential," he said.
Meanwhile Saudi Finance Minister Ibrahim al-Assaf said at the same venue the country continued to spend heavily on capital projects to boost growth.
"The Saudi government continues to implement its investment programme in an effort to stimulate growth and create additional job opportunities for its citizens," he said.