• Outflows

    • LM-11.3.3

      Retail deposits are defined as deposits placed with a bank by a natural person. Deposits from legal entities, sole proprietorships or partnerships are captured in wholesale deposit categories. Retail deposits include demand deposits, saving accounts and term deposits.

      August 2018

    • LM-11.3.4

      Retail deposits are divided into 'stable' and 'less stable' categories as described below:

      A. Stable Deposits

      Stable deposits are subject to a run-off rate of 3%. Stable deposits must meet the following conditions:
      i. Fully insured6 under a deposit insurance scheme; and
      ii. Meets either of the following 2 conditions (a) or (b):
      a) The depositors have other established relationships with the bank that make deposit withdrawal highly unlikely. An established relationship is deemed to exist between the depositor and the bank, if:
      •   The bank has an active contractual relationship with the depositor of at least 12 months duration;
      •   The depositor has a borrowing relationship with the bank for residential loans or other long term loans; or
      •   The depositor has a minimum number of active products, other than loans, with the bank;
      Or
      b) The deposits are in transactional accounts (e.g. accounts where salaries are automatically deposited).
      B. Less Stable Deposits
      (i) Cash outflows related to retail term deposits with a residual maturity or withdrawal notice period greater than 30 days will be excluded from the total expected cash outflows if the depositor has no legal right to withdraw deposits within the 30-day horizon of the LCR, or if early withdrawal results in a significant penalty greater than the loss of profits payable on the deposit;
      (ii) The CBB may, at its discretion, apply run-off rates on these deposits if there are concerns that depositors might withdraw their deposits in the same manner as demand deposits during either normal or stress times, or if there are concerns that banks may have to repay such deposits early in stressed times for reputational reasons;
      (iii) If a bank is unable to readily identify which retail deposits would qualify as 'stable' according to the definition provided above, it must place the full amount in the 'less stable' category; and
      (iv) Run-off rates shall be applied to less stable deposits as outlined in Appendix A.

      6 6 'Fully insured' means that 100 percent of the deposit amount is covered by an effective deposit insurance scheme. Deposit balances up to the deposit insurance limit can be treated as "fully insured". However, any amount in excess of the deposit insurance limit is to be treated as less stable'. For example, if a depositor has a deposit of BD 150,000 that is covered by a deposit insurance scheme, which has a limit of BD 100,000, where the depositor would receive at least BD 100,000 from the deposit insurance scheme if the bank were unable to pay, then BD 100,000 would be considered "fully insured" and treated as stable deposits, while BD 50,000 would be treated as less stable deposits.

      6 An established relationship is deemed to exist between the depositor and the bank, if:

      •   The bank has an active contractual relationship with the depositor of at least 12 months duration; or
      •   The depositor has a borrowing relationship with the bank for residential loans or other long term loans; or

      The depositor has a minimum number of active products, other than loans, with the bank.

      August 2018