• LM-A LM-A Introduction

    • LM-A.1 LM-A.1 Purpose

      • Executive Summary

        • LM-A.1.1

          This Module sets out the CBB's requirements with regards to management of liquidity risk by banks.

          August 2018

        • LM-A.1.2

          Liquidity is the ability of a bank to fund increases in assets and meet obligations as they fall due, without incurring unacceptable losses. Virtually every financial transaction or commitment has implications for a bank's liquidity. Effective liquidity risk management helps ensure a bank's ability to meet cash flow obligations. Liquidity risk management is of paramount importance because a liquidity shortfall at a single institution can have system-wide repercussions.

          August 2018

        • LM-A.1.3

          This Module outlines a set of principles covering the following topics:

          (a) Governance of liquidity risk management;
          (b) Liquidity risk identification, measurement, monitoring and control;
          (c) Foreign currency liquidity management;
          (d) Funding diversification and market access;
          (e) Maintenance of liquidity cushion;
          (f) Intragroup liquidity management;
          (g) Intraday liquidity risk management;
          (h) Collateral management;
          (i) Stress testing and scenario analysis; and
          (j) Contingency Funding Plan.
          August 2018

      • Legal Basis

        • LM-A.1.4

          This Module contains the Central Bank of Bahrain's ('CBB's') Directive (as amended from time-to-time) on the liquidity risk management requirements for conventional banks, and is issued under the powers available to the CBB under Article 38 of the CBB and Financial Institutions Law 2006 ('CBB Law'). The Directive in this Module is applicable to all conventional banks.

          August 2018

        • LM-A.1.5

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

          August 2018

        • LM-A.1.6

          The requirements included in chapters LM-1 to LM-11 must be fully met by 30th June 2019, and the requirements in Chapter LM-12 must fully be met by 31st December 2019.

          August 2018

        • LM-A.1.7

          Branches of foreign bank licensees must apply the requirements under Chapters LM-1 to LM-10 of this Module to the extent appropriate. If branches of foreign bank licensees do not have established policies, procedures, processes and systems at a branch level, they must satisfy the CBB that there are equivalent arrangements at their head office or regional office.

          Added: October 2019

    • LM-A.2 LM-A.2 Module History

      • LM-A.2.1

        This Module was issued in August 2018 as part of Volume One of the CBB Rulebook. Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made. Chapter UG-3 provides further details on Rulebook maintenance and version control.

        August 2018

      • LM-A.2.2

        The changes made to this Module are detailed in the table below:

        Summary of Changes

        Module Ref. Change Date Description of Changes
        LM-11.1.9 07/2019 Added reference to BR regarding LCR reporting.
        LM-A.1.7 10/2019 Added a new Paragraph on branches of foreign banks.
        LM-12.4 – Table 1 01/2020 Amended table on components of ASF Category.
        LM-12.5.1 – LM-12.5.3 01/2020 Amended Section on General Disclosure Requirements.