• LM-11.1 LM-11.1 General Requirements

    • LM-11.1.1

      The requirements of this section is applicable to all Bahraini conventional bank licensees.

      August 2018

    • LM-11.1.2

      Liquidity Coverage Ratio (LCR) has been developed to promote short-term resilience of a bank's liquidity risk profile. The LCR requirements aim to ensure that a bank has an adequate stock of unencumbered high quality liquidity assets (HQLA) that consists of assets that can be converted into cash immediately to meet its liquidity needs for a 30-calendar day stressed liquidity period. The stock of unencumbered HQLA should enable the bank to survive until day 30 of the stress scenario, by which time appropriate corrective actions would have been taken by management to find the necessary solutions to the liquidity crisis.

      August 2018

    • LM-11.1.3

      Bahraini conventional bank licensees must calculate LCR on a consolidated and on a "solo" basis by using the following formula:

              Stock of HQLA        
      Net cash outflows over the next 30 calendar days

      August 2018

    • LM-11.1.4

      Bahraini conventional bank licensees must meet the minimum LCR of not less than 100 percent on a daily basis.

      August 2018

    • LM-11.1.5

      When applying these requirements on a consolidated basis, the computations of LCR for branches and subsidiaries outside Bahrain must be as per the Rulebook requirements applied to all legal entities being consolidated except for the treatment of retail/small business deposits that should follow the relevant parameters adopted in host jurisdictions in which the bank operates.

      August 2018

    • LM-11.1.6

      In cases of restrictions or reasonable doubt about the capability of Bahraini conventional bank licensees with foreign branches and subsidiaries to transfer surplus liquidity from these branches and subsidiaries to the parent entity, the banks must exclude this surplus liquidity from the calculation of the LCR on a consolidated basis.

      August 2018

    • LM-11.1.7

      No excess liquidity should be recognized by a bank with overseas operations in its consolidated LCR. Thus, the eligible HQLA held by a legal entity being consolidated to meet its local LCR requirements (where applicable) can be included in the consolidated LCR to the extent that such HQLA are used to cover the total net cash outflows of that entity. Any surplus at the legal entity level can only be included in the consolidated stock if the assets would also be freely available to the consolidated (parent) entity in times of stress.

      August 2018

    • LM-11.1.8

      LCR in significant currencies: A currency is considered significant if the aggregate liabilities (both on and off-balance sheet) in that currency amount to 5 percent or more of the bank's aggregate liabilities (both on and off-balance sheet) in all currencies. Bahraini conventional bank licensees must monitor the LCR for each significant currency for the bank and its branches/subsidiaries, inside and outside Bahrain.

      August 2018

    • Frequency of Reporting

      • LM-11.1.9

        Bahraini conventional bank licensees are required to submit their "solo" LCR to the CBB within 7 calendar days following the month end, and their consolidated LCR within 14 calendar days following the month end (as required under Section BR-4.3).

        Amended: July 2019
        August 2018

      • LM-11.1.10

        In cases where the LCR falls, or is expected to fall, below 100 percent, Bahraini conventional bank licensees must immediately notify the CBB, report the reasons for the breach or potential breach and present a plan showing the measures they intend to take to restore the LCR ratio.

        August 2018

      • LM-11.1.11

        The stress scenarios assumed in these requirements must be viewed as a minimum supervisory requirement for Bahraini conventional bank licensees. Banks must construct their own scenarios proportionate to their size, business model and complexity of operations, to assess the level of liquidity they must hold over and above this minimum level. These Internal stress scenarios must incorporate time horizons longer than the one mandated by the requirements mentioned in this section.

        August 2018

      • LM-11.1.12

        Bahraini conventional bank licensees must disclose the information on the LCR concurrently with the publication of their quarterly and year-end financial statements. The LCR must be presented as simple averages of daily LCRs over the current and previous period.

        August 2018