• Definitions and Aggregate Limit on Large Exposures

    • CM-4.4.1

      A 'large exposure' is any exposure whether direct or indirect to a counterparty or a group of closely related counterparties which is greater than, or equal to, 10% of the reporting bank's consolidated Total Capital.

      Amended: January 2015
      Amended: January 2011
      October 2007

    • CM-4.4.1A

      'Capital instrument' includes all components of equity capital including ordinary equity, both voting and non-voting, and preference shares. It also includes convertible or hybrid financial instruments which are debt — like in character and which may be converted into equity (such as convertible murabaha). Also for financial institutions and insurance companies, any other financial instruments (such as subordinated debt) which are eligible as regulatory capital should also be included as capital instruments. Sukuk or senior debt instruments would not normally be regarded as "capital instruments" unless they have convertibility features. Equity-like contracts such as joint venture musharaka contracts (investments but not financing) are also included in this definition. The musharaka stake is classified as a capital instrument at onset.

      Amended: January 2012
      Added: January 2011

    • CM-4.4.1B

      'Acquisition' means the acquiring by a bank of beneficial or legal ownership of capital instruments issued by another entity. This would not include securities underwriting until the expiry of the underwriting period (where separate arrangements apply elsewhere in this Module). Acquisition may also be in the form of exercising of rights to take control of capital instruments pledged as collateral. The pledging of capital instruments by a customer to a bank as collateral (e.g. for the purpose of obtaining credit) does not in itself mean that an "acquisition" has taken place. Acquisition also does not include the establishment of new subsidiaries by the bank. Regulatory requirements for the establishment of SPVs and subsidiaries are contained in Section BR-5-2.

      Amended: January 2015
      Amended: January 2012
      Added: January 2011

    • CM-4.4.1C

      'Investment' is any holding by a bank of capital instruments issued by a third party that is not a subsidiary of the bank. Therefore holdings of subordinated debt eligible as regulatory capital issued by another financial institution would be regarded as an "investment". In this case 'holding' means legal or beneficial ownership of capital instruments.

      Amended: January 2012
      Added: January 2011

    • CM-4.4.1D

      A bank has "close links" with:

      (a) Any person/entity which qualifies as a controller of the concerned bank as defined in Chapter GR-5;
      (b) Any entity which is a subsidiary of the bank; and
      (c) Any entity which is an associate of the bank.
      Amended: January 2015
      Amended: January 2012
      Amended: April 2011
      Added: January 2011

    • CM-4.4.1E

      A "major investment" is defined as any acquisition or investment in the capital instruments of another entity by a Bahraini Islamic bank licensee which is equivalent to or more than 10% of the Bahraini Islamic bank licensees consolidated total capital.

      Amended: October 2016
      Amended: April 2015
      Amended: January 2015
      Amended: January 2012
      Added: January 2011

    • CM-4.4.1F

      [This Paragraph was deleted in January 2015.]

      Deleted: January 2015

    • CM-4.4.2

      Total Capital has the same meaning as when used in Section CA-1.1.

      Amended: January 2015
      Amended: January 2011
      October 2007

    • CM-4.4.3

      The aggregate of large exposures may not exceed 800% of the bank's consolidated Total Capital (there are separate sub-limits for "Significant investments" in Section CM-4.10),whether funded or not funded, i.e. contingent commitments.

      Amended: October 2016
      Amended: January 2015
      Amended: January 2011
      October 2007

    • CM-4.4.3A

      The CBB requires that any large exposure, as defined in Paragraph CM-4.4.1, must be priorly approved by the bank's Board of Directors.

      Added: January 2017

    • CM-4.4.4

      [This Paragraph was deleted in January 2015.]

      Deleted: January 2015