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Tue 1 May 2007 12:17 PM

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KSA leads region on Basel II

Saudi banks lead investment in analytics, says SAS.

Saudi Arabia is leading the way when it comes to financial risk management, according to a provider of business intelligence solutions.

Basel Tutunji, regional manager, SAS Middle East, said that the Kingdom was ahead of other Gulf states with regards to guidance on implementing Basel II standards in financial institutions.

Tutunji praised the Saudi Arabia Monetary Authority (SAMA) for its proactive approach, but said that other Central Banks could do more. Basel II will be implemented in Europe and the US next year, but Central Banks in this region have not set specific deadlines for banks to put the necessary procedures in place.

"Before they give a deadline they should also give directions of how they want to do Basel II and they are leaving it up to every bank to do that," said Tutunji.

"There's a gap here. When we talk to banks about Basel II it's more of an internal-driven initiative.

"In Saudi the instructions from SAMA are much stricter and they have a deadline. Banks have to start providing standardised approach reports by the end of June, and IRB (internal rating based) reports by the end of the year, so that's quite aggressive."

SAS provides analytics and consulting services to enable organisations to measure performance and risk, and is seeing particularly strong demand from Saudi Arabia. Its customers in the region include Mashreqbank, Saudi American Bank (Samba), National Commercial Bank, as well as the Central Banks of Kuwait and the UAE.

Tutunji also suggested that there should be closer monitoring of real estate markets and of the exposure of banks to the sector.

"I think the highest risk in the UAE is now in the real estate market," he said. "This is where there is high risk for banks because we have seen the real estate market is driving the banking industry and driving the whole economy.

"With all those projects coming out and people applying for loans for their house, if something happens to the real estate market then the banks will really suffer."

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