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  • BR-5.2 BR-5.2 Bahraini Conventional Banks

    • BR-5.2.1

      The content of this Section is applicable to all Bahraini conventional bank licensees licensed by the CBB in the Kingdom of Bahrain.

      Amended: April 2014
      Amended: October 2010
      October 2007

    • Capital Adequacy

      • BR-5.2.2

        All banks, referred to under Paragraph BR-5.2.1, must give the CBB immediate written notification of any actual breach by such banks of the minimum capital adequacy ratio (CAR) in accordance with Section CA-1.2. Where such notification is given, the bank must also adhere to the additional notification and reporting requirements as set out under Section CA-1.2.

        Amended: January 2015
        Amended: October 2010
        October 2007

    • Write-offs

      • BR-5.2.3

        All banks must notify the CBB of any write-off of a credit facility in excess of BD100,000 (or equivalent in other currencies) and must obtain the CBB's prior approval for write-offs concerning certain parties connected to the concerned bank or other entities (see Section CM-7.1 for full details).

        Amended: July 2012
        Amended: April 2008
        October 07

    • Term Financing Commitments

      • BR-5.2.4

        All banks must consult with the CBB before they enter into any term borrowing facilities or programs which have any restrictive covenants in relation to the capital or activities of the bank (such as the capital adequacy ratio, capital amount, leveraging, compliance with certain regulatory requirements, etc). For the sake of expediting the CBB's reaction to such consultations, banks must submit the draft term sheet of the facility to the Banking Supervision director at the CBB responsible for the supervision of the concerned bank, before committing themselves to the concerned facility (or renewing it).

    • Capital Increases, Changes in Strategy and Establishment of Subsidiaries/SPVs

      • BR-5.2.5

        All Bahraini conventional bank licensees must obtain the CBB's prior written approval for the opening of any new place of business either in the Kingdom of Bahrain or abroad (this would include the establishment or acquisition of a subsidiary, new branches or representative offices). Bahraini conventional bank licensees should refer to Article 51 of the CBB Law 2006 for full details.

        Added: April 2014

      • BR-5.2.6

        All Bahraini conventional bank licensees must obtain the CBB’s prior written approval for any proposed capital increase in a subsidiary and for any major change (regardless of type and/or effect) to the bank’s strategy or corporate plan prior to implementation (See also Paragraph HC-1.2.6).

        Amended: July 2021
        Added: April 2014

      • BR-5.2.7

        All Bahraini conventional bank licensees must obtain the CBB's prior specific written approval if they intend to act as originator, sponsor or manager of a special purpose vehicle ('SPV'), or if they intend to participate in the creation of an SPV, or if they intend to acquire a holding of 20% or more of the equity capital of an SPV. All Bahraini conventional bank licensees must seek prior specific written CBB approval if they are appointed as nominee shareholders of SPVs or hold votes by proxy arrangement in SPVs on behalf of other investors.

        Amended: January 2015
        Added: April 2014

      • BR-5.2.9A

        In addition to the points noted in BR-5.2.9, Bahraini conventional bank licensees which are involved with SPVs in any of the relationships described in Paragraph BR-5.2.7 must:

        (a) Not allow the SPVs to give any type of financial guarantee, warranty or indemnity to the investors in the SPVs or any other counterparty, either directly or on behalf of the bank.
        (b) Ensure that there are no legal or other restrictions on the availability of financial and other information relevant to the SPV and access to its business premises and records.
        (c) Not provide any credit facilities to the SPVs and/or extend any financial/liquidity support and/or guarantees.
        Amended: July 2020
        Added: April 2020

      • BR-5.2.8

        For purposes of Paragraph BR-5.2.7, in order to avoid any delays and/or disruption in implementation of a Bahraini conventional bank licensee's plan in this context, the CBB should be approached as soon as possible, even at a very preliminary stage.

        Added: January 2015

      • BR-5.2.9

        The CBB requires any Bahraini conventional bank licensee associated with an SPV to confirm the following points in any request for approval under Paragraph BR-5.2.7:

        (a) The purpose of the SPV;
        (b) The nature of the relationship between the Bahraini conventional bank licensee and the SPV (i.e. originator, sponsor, manager, investor, controller etc.);
        (c) The proposed consolidation/accounting treatment of the SPV in relation to the Bahraini conventional bank licensee both for the PIR and the audited financial statements' purposes as agreed with its external auditor;
        (d) The availability of financial and other information relevant to the SPV and access to its business premises and records; and
        (e) The Bahraini conventional bank licensee is not providing any guarantees, warranties or financial/liquidity support of any kind to the SPV.
        Amended: April 2020
        Added: January 2015

      • BR-5.2.10

        Where the SPV is consolidated into the accounts of a Bahraini conventional bank, the bank must provide separate accounting information on the SPV to the CBB on a quarterly basis. Furthermore, the annual audited financial statements of all consolidated SPVs must be submitted to the CBB within 3 months of the year end of the concerned SPV.

        Added: January 2015

      • BR-5.2.11

        Where a Bahraini conventional bank has a controller or majority ownership relationship with an SPV, or acts as sponsor, the bank must obtain the prior written approval of the CBB for any changes to the capital, ownership, management or control of SPV. All Bahraini conventional banks must also notify the CBB of any material events in relation to the SPV. If necessary, the CBB may require that formal information exchange arrangements are put in place (e.g. a memorandum of understanding) if the SPV is located in a foreign jurisdiction and its activities are not supervised locally.

        Added: January 2015

    • Early Settlement of Capital Items

      • BR-5.2.12

        In accordance with Paragraph CA-2.1.6(e) and (g) and CA-2.1.10(e), Bahraini conventional bank licensees must seek the CBB's prior written approval before exercising a call on an additional Tier one or Tier two capital issue, partially or in full, prior to the end of its term.

        Amended: January 2015
        Added: October 2014