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  • Sovereign Guarantees and Counter-guarantees

    • CA-4.5.13

      Portions of claims guaranteed by the entities detailed in paragraph CA-3.2.1 above, where the guarantee is denominated in the domestic currency (and US$ in case of a guarantee provided by the Government of Bahrain and CBB) may get a 0% risk-weighting. A claim may be covered by a guarantee that is indirectly counter-guaranteed by such entities. Such a claim may be treated as covered by a sovereign guarantee provided that:

      (a) The sovereign counter-guarantee covers all credit risk elements of the claim;
      (b) Both the original guarantee and the counter-guarantee meet all operational requirements for guarantees, except that the counter-guarantee need not be direct and explicit to the original claim; and
      (c) CBB is satisfied that the cover is robust and that no historical evidence suggests that the coverage of the counter-guarantee is less than effectively equivalent to that of a direct sovereign guarantee.
      Amended: April 2011
      Apr 08