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  • CA-A.2 CA-A.2 Purpose

    • Executive Summary

    • CA-A.2.1

      The purpose of this module is to set out the CBB's capital adequacy Rules and provide guidance on the risk measurements for the calculation of capital requirements by locally incorporated banks. This requirement is supported by Article 44(c) of the Central Bank of Bahrain and Financial Institutions Law (Decree No. 64 of 2006).

      Amended: January 2011
      Apr 08

    • CA-A.2.2

      Principle 9 of the Principles of Business requires that conventional bank licensees maintain adequate human, financial and other resources, sufficient to run their business in an orderly manner (see Section PB-1.9). In addition, Condition 5 of CBB's Licensing Conditions (Section LR-2.5) requires conventional bank licensees to maintain financial resources in excess of the minimum requirements specified in Module CA (Capital Adequacy).

      Apr 08

    • CA-A.2.3

      This Module also sets out the minimum gearing requirements which relevant banks (referred to in Section CA-A.1) must meet as a condition of their licensing.

      Apr 08

    • CA-A.2.4

      The requirements specified in this Module vary according to the Category of conventional bank licensee concerned, their inherent risk profile, and the volume and type of business undertaken. The purpose of such requirements is to ensure that conventional bank licensees hold sufficient capital to provide some protection against unexpected losses, and otherwise allow conventional banks to effect an orderly wind-down of their operations, without loss to their depositors. The minimum capital requirements specified here may not be sufficient to absorb all unexpected losses.

      Apr 08

    • CA-A.2.5

      The CBB requires in particular that the banks maintain adequate capital, in accordance with the requirements of this Module, against their risks.

      Apr 08

    • CA-A.2.6

      This module provides support for certain other parts of the Rulebook, mainly:

      (a) Prudential Consolidation and Deduction Requirements;
      (b) Licensing and Authorisation Requirements;
      (c) CBB Reporting Requirements;
      (d) Credit Risk Management;
      (e) Operational Risk Management;
      (f) High Level Controls:
      (g) Relationship with Audit Firms; and
      (h) Penalties and Fines.
      Apr 08

    • Legal Basis

      • CA-A.2.7

        This Module contains the CBB's Directive (as amended from time to time) relating to the capital adequacy of conventional bank licensees, and is issued under the powers available to the CBB under Article 38 of the CBB Law. The Directive in this Module is applicable to all conventional bank licensees.

        Amended: January 2011
        Apr 08

      • CA-A.2.8

        For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

        Adopted: January 2011