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  • (i) Definition of Eligibility of CRE and RRE as Collateral

    • CA-5.8.117

      Eligible CRE and RRE collateral for corporate, sovereign and bank exposures are defined as:

      (a) Collateral where the risk of the borrower is not materially dependent upon the performance of the underlying property or project, but rather on the underlying capacity of the borrower to repay the debt from other sources. As such, repayment of the facility is not materially dependent on any cash flow generated by the underlying CRE/RRE serving as collateral;53 and
      (b) Additionally, the value of the collateral pledged must not be materially dependent on the performance of the borrower. This requirement is not intended to preclude situations where purely macro-economic factors affect both the value of the collateral and the performance of the borrower.

      53 If the CBB ascertains that public housing policy is supportive of certain real estate sectors, considering them to be an important part of housing market in Bahrain, by means of guarantees or other credit support from government agencies, then mortgage on such multifamily residential real estate can be recognised as eligible collateral for corporate exposures.

      Apr 08

    • CA-5.8.118

      In light of the generic description above and the definition of corporate exposures, income producing real estate that falls under the SL asset class is specifically excluded from recognition as collateral for corporate exposures.

      Apr 08