BANQUE SAUDI FRANSI
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2008 and 2007 _______________________________________________________________________________________________
The Bank’s objectives when managing capital are, to comply with the capital requirements set by SAMA; to safeguard the Bank’s ability to continue as a going concern; and to maintain a strong capital base. Capital adequacy and the use of regulatory capital are monitored daily by the Bank’s management.
The Bank monitors the adequacy of its capital using ratios established by SAMA. These ratios measure capital adequacy by comparing the Bank’s eligible capital with its balance sheet assets, commitments and notional amount of derivatives at a weighted amount to reflect their relative risk. SAMA requires holding the minimum level of the regulatory capital of and maintaining a ratio of total regulatory capital to the risk-weighted asset (RWA) at or above the agreed minimum of 8%.
Credit Risk RWA Operational Risk RWA Market Risk RWA
113,238,990 7,250,000 3,164,425
Tier I Capital Tier II Capital
Total Tier I & II Capital
Capital Adequacy Ratio % Tier I ratio Tier I + Tier II ratio
37 Investment management and brokerage services
The Bank offers investment services to its customers through its subsidiary, which include management of certain investment funds in consultation with professional investment advisors.
Incomes from the subsidiaries are included in the consolidated statement of income under fee from banking services.
The financial statements of these funds are not consolidated with the financial statements of the Bank. However, the Bank’s share of these funds is included in the available for sale investments and fees earned are disclosed under related party transactions.
The Bank through its subsidiary offers Islamic investment management services to its customers, which include management of certain investment funds in consultation with professional investment advisors, having net asset values totalling SAR 2,064 million (2007: SAR 2,257 million).