Banks and Insurance Companies
Only banks and insurance companies licensed by SAMA can offer banking or insurance services in KSA. The criteria and conditions for licenses are set out in the Banking Control Law (“BCL”) and CICL respectively. SAMA has a broad discretion in exercising its licensing powers.
Banks are defined as entities that undertake banking business. banking business under the BCL means receiving money on deposit, opening current accounts, issuing letters of credit and guarantee, payment and collection of cheques, the issue and negotiation of payment orders, promissory notes and bills of exchange, foreign exchange and “other banking business”The BCL and regulations contain provisions as to capital adequacy, compliance. The maximum allowable foreign ownership in banks, is 60% and in insurance companies 49%, consistent with the protocol of accession of KSA to the WTO.
Insurers are defined under the CICL as an insurance companies is SAR 100 million (USD$ 26,67 million) and for re-insurers SAR 200 million (USD$53,34million). 20% of profits must be retained to a statutory reserve until 100% of the paid up capital has been retained.
Under the implementing regulations of the CICL as well as insurers, insurance advisers, agents, brokers and re-insurers must be licensed by SAMA.