5. Minimum Risk-Based Capital Requirements

RWA for credit risk and counterparty credit risk is calculated as the sum of the following: (1) Credit RWA for banking book exposures, except the RWA listed in (2) to (6) below, calculated using: (a) The standardized approach, set out in SAMA Minimum Capital Requirements for Credit Risk chapters 7 to 9 ; or (b) The internal ratings-based (IRB) approach, set out in SAMA Minimum Capital Requirements for Credit Risk chapters 10 to 16 . (2) RWA for counterparty credit risk arising from banking book exposures and from trading book instruments (as specified in SAMA Minimum Capital Requirements for Counterparty Credit Risk (CCR) and Credit Valuation Adjustment (CVA) ), except the exposures listed in (3) to (6) below. (3) Credit RWA for equity investments in funds that are held in the banking book calculated using one or more of the approaches set out in chapter 24 of SAMA Minimum Capital Requirements for Credit Risk : (a) The look-through approach. (b) The mandate-based approach. (c) The fall-back approach. (4) RWA for securitization exposures held in the banking book, calculated using one or more of the approaches set out in chapters 18 to 23 of SAMA Minimum Capital Requirements for Credit Risk : (a) Securitization Standardized Approach (SEC-SA). (b) Securitization External Ratings-Based Approach (SEC-ERBA). (c) Internal Assessment Approach (IAA). (d) Securitization Internal Ratings-Based Approach (SEC-IRBA). (e) A risk weight of 1250% in cases where the bank cannot use (a) to (d) above. (5) RWA for exposures to central counterparties in the banking book and trading book, calculated using the approach set out in chapter 8 of SAMA Minimum Capital Requirements for CCR and CVA . (6) RWA for the risk posed by unsettled transactions and failed trades, where these transactions are in the banking book or trading book and are within scope of the rules set out in chapter 25 of SAMA Minimum Capital Requirements for Credit Risk . RWA for Market Risk 5.5 RWA for market risk is calculated as the sum of the following: (1) RWA for market risk for instruments in the trading book and for foreign exchange risk and commodities risk for exposures in the banking book, calculated using one or more of the following approaches: (a) The standardized approach for market risk, set out in chapters 6 to 9 of SAMA Minimum Capital Requirements for Market Risk ; (b) The internal models approach (IMA) for market risk, set out in chapters 10 to 13 of SAMA Minimum Capital Requirements for Market Risk ; or (c) The simplified standardized approach for market risk, set out in chapter 14 of SAMA Minimum Capital Requirements for Market Risk . (2) RWA for credit valuation adjustment (CVA) risk in the banking and trading book, calculated using one of the following methods set out in chapter 11 of SAMA CCR and CVA Framework : (a) The basic approach to CVA risk (BA-CVA). (b) The standardized approach to CVA risk (SA-CVA). (c) 100% of the bank's RWA for counterparty credit risk, for banks that have exposures below a materiality threshold (see paragraph 9 of chapter 11 in SAMA CCR and CVA Framework ). RWA for Operational Risk 5.6 RWA for operational risk is calculated using the standardized approach for operational risk, set out in paragraph 7.1 of SAMA Minimum Capital Requirements for Operational Risk . Calculation of the Output Floor 5.7 The standardized approaches to be used to calculate the base of the output floor referenced in paragraph