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Loan Purchase Agreement for Saudi Arabia

Loan Purchase Agreement Template for Saudi Arabia

A comprehensive legal agreement governed by Saudi Arabian law that facilitates the transfer of loan portfolios between financial institutions. The document incorporates essential Sharia compliance elements, adheres to SAMA regulations, and includes detailed provisions for the transfer of rights, obligations, and security interests. It addresses both the commercial aspects of the transaction and the regulatory requirements specific to the Saudi Arabian banking sector, ensuring compliance with Islamic banking principles while providing a clear framework for the transfer of loan assets.

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Loan Purchase Agreement

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What is a Loan Purchase Agreement?

The Loan Purchase Agreement is a specialized financial document used in Saudi Arabia when one financial institution wishes to acquire a loan portfolio from another. This document is particularly important in scenarios such as bank restructuring, portfolio optimization, or strategic realignment of lending businesses. It must comply with both Saudi Arabian banking regulations and Sharia principles, making it distinct from conventional loan purchase agreements used in other jurisdictions. The agreement typically covers detailed provisions for loan transfer mechanics, borrower notifications, regulatory approvals (particularly from SAMA), and ongoing servicing arrangements. It's essential for portfolio sales, securitizations, and other structured finance transactions in the Saudi Arabian market, and must address specific local requirements such as Sharia compliance certificates and SAMA approval processes.

What sections should be included in a Loan Purchase Agreement?

1. Parties: Identification of the Seller and Purchaser, including full legal names and registration details

2. Background: Context of the transaction, nature of the loan portfolio, and confirmation of Sharia compliance

3. Definitions and Interpretation: Key terms used in the agreement, including specific Saudi banking and financial terms

4. Sale and Purchase: Core transaction terms, purchase price, and payment mechanics

5. Conditions Precedent: Required approvals, documents, and conditions before completion

6. Completion: Mechanics and timing of the transfer, including required registrations and notices

7. Seller's Representations and Warranties: Statements about the loan portfolio, Sharia compliance, and seller's authority

8. Purchaser's Representations and Warranties: Statements about purchaser's authority and capacity to complete the transaction

9. Covenants: Ongoing obligations of both parties, including regulatory compliance

10. Transfer Mechanics: Detailed process for transferring the loans, including documentation requirements

11. Indemnities: Protection mechanisms for breach of warranties or undisclosed issues

12. Confidentiality: Provisions for maintaining confidentiality of transaction and customer information

13. Notices: Communication procedures between parties

14. Governing Law and Jurisdiction: Confirmation of Saudi law governance and dispute resolution mechanisms

What sections are optional to include in a Loan Purchase Agreement?

1. Servicing Arrangements: Required if the seller will continue to service the loans post-transfer

2. Consumer Protection Provisions: Required if the loan portfolio includes consumer loans

3. Foreign Investment Provisions: Required if any party is a foreign entity

4. Sharia Board Approval: Detailed section about Sharia compliance if required by either party

5. SAMA Compliance: Specific section addressing Saudi Arabian Monetary Authority requirements if particularly complex

6. Data Protection: Detailed provisions if significant personal data is involved

7. Currency Provisions: Required if any loans or payments involve foreign currency

8. Tax Provisions: Detailed tax treatment if complex tax implications exist

What schedules should be included in a Loan Purchase Agreement?

1. Schedule 1 - The Loans: Detailed list and characteristics of loans being purchased

2. Schedule 2 - Form of Transfer Documents: Ƶ for transfer documentation required under Saudi law

3. Schedule 3 - Completion Requirements: Detailed checklist of completion deliverables

4. Schedule 4 - Seller's Power of Attorney: Form of power of attorney for executing transfer documents

5. Schedule 5 - Form of Notices: Template notices to borrowers regarding the transfer

6. Schedule 6 - Excluded Rights: Any rights or obligations excluded from the transfer

7. Schedule 7 - Sharia Structure: Detailed explanation of Islamic finance structure used

8. Appendix A - Required Regulatory Approvals: List of required regulatory approvals and status

9. Appendix B - Due Diligence Findings: Summary of key due diligence findings and resolutions

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Saudi Arabia

Publisher

Ƶ

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions



















































Clauses







































Relevant Industries

Banking

Financial Services

Islamic Finance

Asset Management

Investment Banking

Corporate Banking

Consumer Banking

Debt Trading

Financial Technology

Credit Services

Relevant Teams

Legal

Finance

Compliance

Risk Management

Islamic Banking

Treasury

Credit

Corporate Finance

Due Diligence

Portfolio Management

Investment

Operations

Regulatory Affairs

Relevant Roles

Chief Financial Officer

Head of Legal

Islamic Finance Specialist

Compliance Officer

Risk Manager

Portfolio Manager

Treasury Manager

Senior Legal Counsel

Sharia Compliance Officer

Investment Manager

Director of Banking

Head of Credit

Corporate Finance Manager

Due Diligence Manager

Transaction Manager

Chief Risk Officer

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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