Article 11 of the Saudi Banking Control Law
المادة 11 من نظام مراقبة البنوك
The article bars a bank from changing its capital, merging, owning shares abroad, ceasing business or opening branches without prior written license from the Agency and on its conditions.
Official text (Arabic)
This article has not been amended since the law was issued.
يحظر على أي بنك أن يقوم بأي عمل من الأعمال الآتية إلا بعد الحصول على ترخيص كتابي سابق من المؤسسة وبالشروط التي تحددها:
أ - تعديل تكوين رأس ماله المدفوع أو المستثمر.
ب - الاتفاق على الاندماج أو المشاركة في نشاط بنك آخر أو أية منشأة أخرى تزاول الأعمال المصرفية.
ج - امتلاك أسهم أية شركة مؤسسة في خارج المملكة.
د - التوقف عن مزاولة الأعمال المصرفية. وفي هذه الحالة يجب على المؤسسة قبل الموافقة على هذا التوقف أن تتحقق من قيام البنك بعمل الترتيبات اللازمة للمحافظة على حقوق المودعين.
هـ - فتح فروع أو مكاتب أخرى في المملكة، وكذلك فتح فروع أو مكاتب أخرى للبنوك الوطنية في خارج المملكة. وعلى المؤسسة قبل أن تمنح الترخيص الكتابي في الحالات المنصوص عليها في هذه الفقرة أن تحصل على موافقة وزير المالية والاقتصاد الوطني عليه.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 11 explained in plain English
This article sets out fundamental decisions a bank cannot take on its own will, but needs a prior written license from the Agency on the conditions it sets:
- (a) Changing the composition of its capital, paid-up or invested.
- (b) Agreeing to a merger or participation in the business of another bank or any other establishment carrying on banking business.
- (c) Owning shares of any company established outside the Kingdom.
- (d) Ceasing to carry on banking business. Here the Agency, before approving, must verify that the bank has made the arrangements necessary to preserve depositors' rights.
- (e) Opening other branches or offices in the Kingdom, and likewise national banks opening branches or offices outside the Kingdom. In this case the Agency must, before granting the license, obtain the approval of the Minister of Finance and National Economy.
The license must be written and prior to the act, and a later notification does not replace it. Anyone planning a merger or restructuring of a bank's capital may use a lawyer specialized in banking and finance.
Practical example
A national bank in Riyadh wants to open a new branch in Abha and another branch in a Gulf country. It may not do so except with a prior written license from the Agency, and the Agency itself grants this license only after obtaining the approval of the Minister of Finance and National Economy.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 11 of the Saudi Banking Control Law
Does a bank need approval to open a new branch?
Yes. It needs a prior written license from the Agency, and the Agency obtains the approval of the Minister of Finance and National Economy before granting it.
What happens to depositors' rights if a bank wants to cease business?
The Agency does not approve ceasing before verifying that the bank has made the arrangements necessary to preserve depositors' rights.
May a bank merge with another bank without approval?
No. Agreeing to a merger or participation in another bank's business needs a prior written license from the Agency.
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.