BR-A.1.1

The purpose of this Module is to set out the Central Bank of Bahrain's ('CBB') reporting requirements applicable to the banks as part of the CBB's ongoing supervision activities.

BR-A.1.2

This Module provides support for certain other parts of the Rulebook, mainly:

BR-A.1.3

Unless otherwise stated, all reports referred to in this Module should be addressed to Islamic Financial Institutions Supervision Directorate of the CBB.

BR-A.1.4

This Module contains the CBB's Directive (as amended from time to time) relating to reporting requirements of the CBB and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Directive in this Module is applicable to Islamic bank licensees.

BR-A.1.5

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

BR-A.2.1

All locally incorporated banks in the Kingdom of Bahrain are required to submit to the CBB their annual audited financial statements (in compliance with the provisions set out under Section BR-1.1) no later than 3 months from the end of the bank's financial year. In addition, these banks are also required to submit supplementary information (as listed under Section BR-1.1) to the CBB.

BR-A.2.2

All Bahrain branches of foreign banks are required to submit to the CBB their annual audited financial statements (in compliance with the provisions set out under Section BR-1.2) no later than 3 months from the financial year end. In addition, these banks are also required to submit supplementary information (as listed under Section BR-1.2) to the CBB.

BR-A.2.3

All Bahrain retail branches of foreign banks are required to submit to the CBB their Balance Sheet and Profit and Loss Accounts (in compliance with the provisions set out under Section BR-2.1) no later than the end of 2 months from the reporting period end.

BR-A.2.4

All Bahraini Islamic Bank Licensees in the Kingdom of Bahrain are required to submit to the CBB the following information on a quarterly basis:

BR-A.2.5

All Bahrain branches of foreign banks are required to submit to the CBB PIR Forms (in accordance with the provisions set out under Section BR-3.2).

BR-A.2.6

[This Paragraph was deleted July 2011].

BR-A.2.7

All banks licensed by the CBB in the Kingdom of Bahrain are required to submit to the CBB monthly statistical returns as required under Section BR-4.1).

BR-A.2.7A

All banks licensed by the CBB in the Kingdom of Bahrain are required to report monthly to the CBB of all payments and transfers of funds amounting to BD 3,000 or above from accounts held by the bank for charitable organisations registered in the Kingdom of Bahrain (as required under Paragraphs BR-4.1.5 and FC-1.6.4).

BR-A.2.8

All Bahraini Islamic Bank Licensees listed on the Bahrain Stock Exchange are required to report to the Capital Markets Supervision Directorate of the CBB, on a monthly basis, information relating to their Directors' interests in the shares of Bahraini Islamic Bank Licensees listed on the Bahrain Stock Exchange and submit exposures to connected counterparties to Banking Supervision Directorate (in accordance with the provisions set out under Section BR-4.3).

BR-A.2.8A

All banks licensed by the CBB are required to complete online non-financial information related to their institution by accessing the CBB's institutional information system (IIS) (as required under Section BR-4A.1).

BR-A.2.9

All banks licensed by the CBB in the Kingdom of Bahrain are required to notify and report to the CBB on the following matters in Section BR-5.1:

BR-A.2.10

All Bahraini Islamic Bank Licensees are required to give the CBB immediate written notification of any actual breach by such bank of the minimum Risk Asset Ratio(s) (RAR) and to consult with the CBB prior to entering into any term borrowing arrangements (Section BR-5.2).

BR-A.2.11

All retail banks licensed by the CBB in the Kingdom of Bahrain are required to notify the CBB on the following matters:

BR-A.2.12

Islamic bank licensees must clearly indicate the purpose of any communication addressed to the CBB. In cases of lack of response to such communication by the CBB, the licensee must not infer or assume implied acceptance, approval or acknowledgment of the contents of such communication.

BR-A.3.4

The contents in this Module are effective from the date shown at the foot of the page or from the date of changes shown in BR-A.3.3.

BR-1.1.2

All Bahraini Islamic Bank Licensees are required to submit to the CBB their annual audited financial statements within 3 months from the financial year end.

BR-1.1.2A

All Bahraini Islamic Bank Licensees are required to submit to the CBB their draft year-end financial statements and must attend a meeting at the CBB with their supervisory point of contact (SPOC) and their external auditor. The bank must obtain their audit committee's prior approval of the draft financial statements before submitting these to the CBB. Subsequent to the meeting with the CBB, the financial statements (subject to any adjustments) must be submitted to the Board for its approval and to the shareholders at the annual general meeting for ratification.

BR-1.1.3

[This Paragraph was deleted in October 2010].

BR-1.1.4

In addition to the statements required in Paragraph BR-1.1.2, banks are also required to submit to the Central Bank the following information within 3 months of their financial year end:

BR-1.1.4A

In instances where a bank has non-operational subsidiaries, the bank should contact its supervisory point of contact to establish whether the requirements of Subparagraph BR-1.1.4(c) are applicable.

BR 1.1.4B

[This Paragraph was deleted in April 2023].

BR-1.1.4C

Banks are required to submit to the Central Bank an agreed upon procedures report concerning the annual disclosures required by Module PD, Section PD-1.3 and Chapter PD-6 (see also AU-3.1.3) within 4 months of their financial year end;

BR-1.1.5

In addition to the provisions of Section AU-3.4, the audited financial statements or the annual report of these banks should be in full compliance with the disclosure requirements set out under Sections PD-1.3 and PD-1.4 (as applicable).

BR-1.1.6

Banks are reminded that they must submit a soft copy (electronic) of their full annual report to the CBB within 4 months of the end of their financial year (See PD-1.2.6).

BR-1.2.2

All branches, referred to under Paragraph BR-1.2.1, are required to submit to the CBB their annual audited financial statements of their Bahrain operations within 3 months from the financial year end.

BR-1.2.3

In addition to the statements required in Paragraph BR-1.2.2, branches are also required to submit to the CBB within 3 months from their financial year end the following information:

BR-1.2.3A

Branches of foreign banks are also required to submit to the CBB the head office's Annual Report within 1 month of the date of publication and distribution by the head office.

BR-1.2.4

If specific provisions against the assets of a branch are maintained in the books of its head office, the CBB should be advised on an annual basis and in writing (along with the information listed under Paragraph BR-1.2.3) of the amount of provisions set aside for the Bahrain branch's bad debts (and any other non-performing assets). For detailed guidance related to this subject, see Section CM-3.3.

BR-1.2.5

The annual accounts must be in full compliance with the Financial Accounting Standards issued by AAOIFI or where AAOIFI standards do not cover a subject, International Financial Reporting Standards (IFRS) must be used.

BR-2.1.2

Branches (referred to under Paragraph BR-2.1.1) are required to submit to the CBB their reviewed semi-annual (interim) financial statements (in the same format as their Annual Audited Accounts) for their Bahrain operations within 2 months of the date of these statements.

BR-2.1.2A

All retail branches of foreign banks must submit to the CBB at least 5 working days prior to the intended publication date, the following documents:

BR-2.1.3

The statements mentioned under Paragraph BR-2.1.2 must be in compliance with the requirements set out under Section PD-2.1.

BR-2.2.2

The financial statements mentioned under Paragraph BR-3.1.6 should be in compliance with the requirements set out under Section PD-3.1.

BR-2.2.3

In addition to the financial statements required in Paragraph BR-3.1.6, banks are also required to submit to the CBB the following information within two months of the end of the half-year:

BR-2.2.4

When acting as an issuer, promoter or manager of a private placement of securities, Bahraini Islamic bank licensees must provide on a semi-annual basis to investors and the CBB a progress report on the private placement. The semi-annual reports are to be provided as of 30th June and 31st December and must be submitted to the investors and the CBB within three months of the reporting period.

BR-2.2.5

The reports referred to in Paragraph BR-2.2.4 are to be issued following the issuance or distribution of a PPM for the solicitation of funds from investors.

BR-2.2.6

The requirements for the report on private placements are in addition to any requirements outlined in Module OFS (Offering of Securities) under Volume 6 (Capital Markets).

BR-2.2.7

Bahraini Islamic bank licensees may opt to issue the required report on a more frequent basis.

BR-2.2.8

The report required under Paragraph BR-2.2.4 must be issued for private equity purchases of existing companies as well as for real estate and other projects under development and must follow the requirements of Appendix BR-18 under Part B of Volume 2.

BR-2.3.2

[This Paragraph was deleted in April 2019].

BR-3.1.2

All banks, referred to under Paragraph BR-3.1.1, must complete PIRI forms (see Appendix BR-5), on a quarterly basis. This form is intended to be a financial report of the bank. Banks should therefore include on it all assets and liabilities of their head office and their branches in Bahrain and abroad and subsidiaries where applicable. Separate figures in respect of the head office or 'Bahrain operations' are not required.

BR-3.1.3

The forms referred to under Paragraph BR-3.1.2 must be submitted to the CBB on a quarterly basis within 30 calendar days of the end of the reporting date.

BR-3.1.4

The CBB requires all banks to request their external auditor to conduct a review of the prudential returns on a quarterly basis (see also Sections CA-1.5 and AU-3.6 for fuller details). The results of such review (in the form of an Agreed Upon Procedures report as shown in Appendix BR-9) must be submitted to the CBB no later than 2 months from the end of the subject quarter.

BR-3.1.5

Banks which demonstrate to the satisfaction of the CBB that they have fulfilled all of the CBB's requirements with regard to Prudential Returns for at least two consecutive quarters may apply (in writing) to the Central Bank for an exemption from the review procedure set out in Paragraph BR-3.1.4 above. Such exemption may be withdrawn by the CBB at any time, should errors be detected.

BR-3.1.5A

For Bahraini Islamic bank licensees, all existing exemptions in respect of PIRI review as at 31^st December 2014 will cease.

BR-3.1.5B

[This Paragraph was deleted in July 2021].

BR-3.1.6

All banks, referred to under Paragraph BR-3.1.1, should submit their reviewed (unaudited) quarterly financial statements to the CBB within 2 months from the statement date.

BR-3.1.6A

All Bahraini Islamic bank licensees must submit to the CBB at least 5 working days prior to the intended publication date and before their board of directors' meeting to discuss the interim financial statements, the following documents:

BR-3.1.7

The statements mentioned under Paragraph BR-3.1.6 should be in compliance with the requirements set out under Section PD-3.1.

BR-3.1.7AA

All Bahraini Islamic bank licensees must submit to the CBB details of their largest country exposures on a consolidated basis through Electronic Submission of Returns and Analysis of Data (ESRAD). This report must be submitted to the CBB within 20 calendar days of the end of the relevant quarter.

BR-3.1.7A

All Bahraini Islamic bank licensees must submit to the CBB details of their large exposures in accordance with Appendix BR-19. This report must be submitted to the CBB within 20 calendar days of the end of the reporting date.

BR-3.1.7B

All Bahraini Islamic bank licensees must submit to the CBB details of their overseas banking subsidiaries and branches in accordance with Appendix BR-7. This report must be submitted to the CBB within one month of the end of the relevant quarter.

BR-3.1.7C

All Bahraini Islamic bank licensees must submit to the CBB reviewed statement of financial position and income statement of their non-banking subsidiaries. If reviewed statements are unavailable, management accounts will be accepted by the CBB. These statements are to be submitted within one month of the end of the relevant quarter.

BR-3.1.8

In accordance with Paragraph BC-10.7.1, all banks must submit to the CBB Consumer Protection Unit, 20 days after the end of the quarter, a report on complaints.

BR-3.1A.2

All branches, referred to under Paragraph BR-3.1A.1, are required by the CBB to complete PIR forms (see Appendix BR-5).

BR-3.1A.3

These should be submitted to the CBB no later than 30 calendar days from the end of the said quarter.

BR-3.1A.4

The CBB requires all banks to request their external auditor to conduct a review of the prudential returns on a quarterly basis. The results of such review (in the form of a return review report) should be submitted to the CBB no later than 2 months from the end of the subject quarter. A bank may apply for exemption from this requirement provided that it meets the criteria set out under Paragraph BR-3.1A.5 below.

BR-3.1A.5

Banks which demonstrate to the satisfaction of the CBB that they have fulfilled all of the CBB's requirements with regard to Prudential Returns for at least two consecutive quarters may apply (in writing) to the CBB for an exemption from the review procedure set out in Paragraph BR-3.1A.4 above.

BR-3.1A.5A

All retail branches of foreign banks must submit the completed Form: Information Required for Annual and Interim Financial Review (Appendix BR-21) prepared in accordance with Appendix BR-20 together with the PIRI forms within 30 calendar days (See Paragraph BR-3.1.3) or together with any draft financial statement submissions (See Paragraph BR-2.1.2A).

BR-3.1A.5B

All wholesale branches of foreign banks must submit the completed Form: Information Required for Annual and Interim Financial Review (Appendix BR-21) prepared in accordance with Appendix BR-20, together with the PIRI forms within 30 calendar days of each quarter end (See Paragraph BR-3.1.3).

BR-3.1A.6

In accordance with Paragraph BC-10.7.1, all banks must submit to the CBB Consumer Protection Unit, 20 days after the end of the quarter, a report on complaints.

BR-3.2.2 [deleted]

BR-3.2.3 [deleted]

BR-4.1.2

All banks, referred to under Paragraph BR-4.1.1, are required to submit to the CBB (Financial Stability Directorate) the following monthly statistical returns:

(For instructions relating to the completion of the above mentioned returns, refer to Appendix BR-1 and for returns forms refer to Appendix BR-2).

BR-4.1.3

The returns included in Appendix BR-2 should be submitted to the CBB in electronic form (Excel spreadsheet) via email to erdsr@cbb.gov.bh no later than the 10^th of the month following the end of the relevant month.

BR-4.1.4

[This Paragraph deleted with effect from 1 July 2006].

BR-4.1.4A

The Banking Services Directorate will calculate the reserve requirement of each Islamic bank licensee bank on a monthly basis using the figures reported in the monthly statistical report, Form SR-2 (see Rule BR-4.1.2 above) and will notify each bank of its required reserve (if any).

BR-4.1.4B

The monthly reserve requirements will be calculated as 5% of the total of an Islamic bank licensee's BD non-bank funds (whether call or unrestricted investment accounts – see LR-2.5.10).

BR-4.1.4C

Reserve requirements, because of their scope of coverage (cf. Rule BR-4.1.4B), generally only apply to retail banks. They may apply, however, to wholesale banks, if they undertake on-shore business (cf. Section LR-1.2).

BR-4.1.5

All banks, referred to under Paragraph BR-4.1.1, must report to the CBB all payments and transfers of funds amounting to BD 3,000 or above (or equivalent in other currencies) from accounts held by the bank for charitable organisations registered in the Kingdom of Bahrain (also see Paragraph FC-1.6.4). Such report must include details of amount transferred, account name and number, and beneficiary (name and location).

BR-4.3.2

All locally incorporated banks listed on a licensed exchange are required to report to the Capital Markets Supervision Directorate of the CBB the following information, on a monthly basis, relating to their Directors:

BR-4.3.3

The information required in Paragraph BR-4.3.2 above should be submitted to the CBB no later than 15 calendar days following the end of the relevant month.

BR-4.3.4

All banks, referred to under Paragraph BR-4.3.1, are required to submit to the CBB their exposures to connected parties on a monthly basis on the fourth working day of the month.

(For instructions relating to the reporting of the above mentioned exposures, refer to Appendix BR-11 and for the concerned reporting forms refer to Appendix BR-10).

BR-4.3.5

Bahraini Islamic bank licensees must 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 (see Appendix BR-23) through Electronic Submission of Returns and Analysis of Data (ESRAD).

BR-4A.1.1

All banks licensed by the CBB are required to complete online non-financial information related to their institution by accessing the CBB's institutional information system (IIS). Banks must update the required information at least on a quarterly basis or when a significant change occurs in the non-financial information included in the IIS. If no information has changed during the quarter, the bank must still access the IIS quarterly and confirm the information contained in the IIS. Licensees must ensure that they access the IIS within 20 calendar days from the end of the related quarter and either confirm or update the information contained in the IIS.

BR-4A.1.2

Banks failing to comply with the requirements of Paragraph BR-4A.1.1 or reporting inaccurate information are subject to financial penalties or other enforcement actions as outlined in Module (EN) Enforcement.

BR-4A.6.2

Islamic retail bank licensees acting as AISPs/PISPs must submit the information required under Appendix OB-1 under Volume 5 to the CBB within 2 weeks of each month end.

BR-5.1.2

Should any locally incorporated bank find that, for reasons outside its control or otherwise, it has an exposure to an individual counterparty (other than an exempt exposure) which results in it exceeding any of the limits set out under Chapter CM-4, this should be reported immediately to the CBB for its consideration, and action should be taken immediately to bring the exposure back within applicable limits as soon as possible.

BR-5.1.3

[This Paragraph was moved to Section BR-5.2].

BR-5.1.4

[This Paragraph was deleted in April 2012].

BR 5.1.5

The CBB must be notified of any changes to the positions mentioned under Paragraph LR-1A.1.2 that may occur from time to time subject to observing the requirements set out in Section LR-1A.1. (See also Paragraph LR-1A.1.22)

BR-5.1.6

For detailed rules and guidance on prior notification of appointment and changes in management inventory, refer to Chapters HC-1 and LR-1A.

BR-5.1.7

[This Paragraph was deleted in July 2018].

BR-5.1.8

All banks must notify the CBB of the appointment of a compliance manager/officer (refer to Section LR-1A.1), and must submit the appointee's Curriculum Vitae to the CBB. The CBB's approval must be received by the bank before the appointment becomes final. The bank must outline how the compliance function fits into the bank's senior management reporting structure, and must give details of relevant reporting lines within the bank.

BR-5.1.9

The Money Laundering Reporting Officer (or his/her duly authorised delegate) must send a report to the Compliance Directorate of the CBB where he/she knows or has suspicions that a transaction might involve money laundering or terrorist financing, either due to the customer's economic standing or because it meets one of the examples of suspicious transactions described in Appendix FC-3.

BR-5.1.10

[This Paragraph was deleted in April 2022].

BR-5.1.11

[This Paragraph was deleted in January 2022].

BR-5.1.12

The CBB requires all banks to notify it immediately of any act that might contravene the provisions of UN Security Council Resolution 1373 (2001). Banks should refer to Chapter FC-8 for full details of this requirement.

BR-5.1.13

All banks must report immediately to the CBB any frauds, either attempted or realised, or any well-founded concerns about the integrity of individual Directors or members of management. This obligation to disclose extends to individual Board members and members of management: i.e. if a Director or member of management has reasonable grounds to believe that information that should have been reported to the CBB has not, then they have a duty to report the matter personally to the CBB. All such cases shall be treated in the strictest confidence by the CBB.

BR-5.1.14

All banks must report immediately to the CBB any material losses as soon as the bank becomes aware of them. This notification requirement is separate from notifications for loan write-offs (see BR 5.2.3) or frauds (see above), but refers to losses caused by external events (e.g. falls in stock markets) or internal control failures. In this context 'material' would mean: a loss which exceeds 5% of net earnings in a given quarter; or a loss which reduces the bank's capital adequacy by more than 1%; or a loss which reduces total assets by more than 1%.

BR-5.1.15

[This requirement was moved in October 2011 to Paragraph BR-4.1.5 as it is a monthly requirement].

BR-5.1.16

All banks must refer to Section GR-4.1 on business transfer requirements.

BR-5.1.17

Banks must inform the CBB, in writing, of the following:

BR-5.1.17A

Should the CBB have a cause for concern following its review of the notification referred to under Subparagraph BR-5.1.17(c), it may investigate the matter and should it establish the existence of any irregularity, misconduct or unfair decisions, it may take enforcement action on the bank, including an adverse action on the fit and proper status of the person(s) responsible.

BR-5.2.2

All banks, referred to under Paragraph BR-5.2.1, must give the CBB immediate written notification of any actual breach by such banks of the minimum capital adequacy ratio (CAR) in accordance with Section CA-1.2. Where such notification is given, the bank must also adhere to the additional notification and reporting requirements as set out under Section CA-1.2.

BR-5.2.3

All banks, referred to under Paragraph BR-5.2.1, must notify the CBB of any write-off of a credit facility in excess of BD 100,000 (Bahraini Dinars One Hundred Thousand), or its equivalent in foreign currency and must obtain the CBB's prior approval for write-offs concerning certain parties connected to the concerned bank. See Section CM-6.1 for further details.

BR-5.2.4

Banks may in certain circumstances apply to the CBB to use behavioural adjustments (Estimates) to their contractual data provided under Section E of PIRI Forms (also see Section AU-3.5). Such application must be supported by data for a minimum period of two years and verified by the external auditor.

BR-5.2.5

All banks must consult with the CBB before they enter into any term borrowing facilities or programs which have any restrictive covenants in relation to the capital or activities of the bank (such as the capital adequacy ratio, capital amount, leveraging, compliance with certain regulatory requirements, etc). For the sake of expediting the CBB's reaction to such consultations, banks must submit the draft term sheet of the facility to the Banking Supervision director at the CBB responsible for the supervision of the concerned bank, before committing themselves to the concerned facility (or renewing it).

BR-5.2.6

All banks, referred to under Paragraph BR-5.2.1, must obtain the CBB's prior approval of any transfer of any exposures to Qard Hassan in excess of BD100,000 or its equivalent in foreign currency (see Paragraph CM-8.1.19). The prior approval requirement applies to both on-balance sheet and restricted investment account related exposures.

BR-5.2.7

All Bahraini Islamic bank licensees must obtain the CBB's prior written approval for the opening of any new place of business either in the Kingdom of Bahrain or abroad (this would include the establishment or acquisition of a subsidiary, new branches or representative offices). Bahraini Islamic bank licensees should refer to Article 51 of the CBB Law 2006 for full details.

BR-5.2.8

All Bahraini Islamic bank licensees must obtain the CBB's prior written approval for any proposed capital increase in a subsidiary and for any major changes (regardless of type and/or effect) to the bank's strategy or corporate plan prior to implementation (See also Paragraph HC-1.2.6).

BR-5.2.9

All Bahraini Islamic bank licensees must obtain the CBB's prior specific written approval if they intend to act as originator, sponsor or manager of a special purpose vehicle ('SPV'), or if they intend to participate in the creation of an SPV, or if they intend to acquire a holding of 20% or more of the equity capital of an SPV. All Bahraini Islamic bank licensees must seek prior specific written CBB approval if they are appointed as nominee shareholders of SPVs or hold votes by proxy arrangement in SPVs on behalf of other investors.

BR-5.2.10

For purposes of Paragraph BR-5.2.9, in order to avoid any delays and/or disruption in implementation of a Bahraini Islamic bank licensee's plans in this context, the CBB should be approached as soon as possible, even at a very preliminary stage.

BR-5.2.11

The CBB requires any Bahraini Islamic bank licensee associated with an SPV to confirm the following points in any request for approval under Paragraph BR-5.2.9:

BR-5.2.12

In addition to the points noted in BR-5.2.11, Bahraini Islamic bank licensees which are involved with SPVs in any of the relationships described in Paragraph BR-5.2.9 must:

BR-5.2.13

For purposes of Paragraph BR-5.2.12, in case of new acquisition or investment after the date of issuance of these rules, when conventional borrowing exists, it should be replaced by Islamic financing as soon as possible and in no case later than 12 months from the date of investment. In case of existing investments before the date of issuance of these rules, where conventional borrowing exists, it should be replaced by Islamic financing as soon as possible and in no case later than 12 months from the date of issuance of these rules. Both cases are extendable subject to SSB approval.

BR-5.2.14

Bahraini Islamic bank licensees which are involved with SPVs in any of the relationships described in Paragraph BR-5.2.9 must not allow such SPVs to give any type of financial guarantee, warranty or indemnity to the Rab Al Maal, the Muwakil or investors in the SPV or any other counterparty, customer or stakeholder either directly or on behalf of the Bahraini Islamic bank licensee.

BR-5.2.15

The Shari'a Supervisory Board of the Bahraini Islamic bank licensee must monitor on an ongoing basis the Shari'a compliance of the SPVs and must oversee the conduct of the annual Shari'a compliance review of transactions, assets, liabilities and other commitments and relationships entered into by all SPVs with which the Bahraini Islamic bank licensee is involved (by way of the relationships described in Paragraph BR-5.2.9). The Shari'a compliance function of the Bahraini Islamic bank licensee must perform such reviews.

BR-5.2.16

Bahraini Islamic bank licensees which are involved with SPVs in any of the relationships described in Paragraph BR-5.2.9 must not transfer non-performing or impaired assets from their own balance sheets to such SPVs or vice versa.

BR-5.2.17

Where the SPV is consolidated into the accounts of a locally incorporated bank, the bank must provide separate accounting information on the SPV to the CBB on a quarterly basis. Furthermore, the annual audited financial statements of all consolidated SPVs must be submitted to the CBB within 3 months of the year end of the concerned SPV.

BR-5.2.18

Where a locally incorporated bank has a controller or majority ownership relationship with an SPV, or acts as sponsor, the bank must obtain the prior written approval of the CBB for any changes to the capital, ownership, management or control of the SPV. All Bahraini Islamic Bank Licensees must also notify the CBB of any material events in relation to the SPV. If necessary, the CBB may require that formal information exchange arrangements are put in place (e.g. a memorandum of understanding) if the SPV is located in a foreign jurisdiction and its activities are not supervised locally.

BR-5.3.2

All banks, referred to under Paragraph BR-5.3.1, should notify the CBB of information relating to any new or expanded customer products and facilities in accordance with the requirements set out under Section BC-4.6.

BR-5.3.3

[This Paragraph deleted July 2006.]

BR-5.3.4

In accordance with Section BC-6.1, all banks referred to under Paragraph BR-5.3.1, must notify the CBB in writing if they installed or removed an ATM in Bahrain.

BR-5.3.5

In accordance with Paragraph BC-4.11.3, retail banks must notify the CBB in instances where donated funds have been received by an NGO and no valid funds collection license was submitted.

BR-6.1.4

The CBB may ask banks to provide it with information at the request of or on behalf of other supervisors to enable them to discharge their functions properly. Those supervisors may include overseas supervisors or government agencies in Bahrain. The CBB may also, without notifying a bank, pass on to those supervisors or agencies information that it already has in its possession.

BR-6.5.1

The content of this Chapter is applicable to all banks and appointed experts.

BR-6.5.2

The purpose of the contents of this Chapter is to set out the roles and responsibilities of appointed experts when appointed pursuant to Article 114 or 121 of the CBB Law (see EN-7.1.1). These Articles empower the CBB to assign some of its officials or others to inspect or conduct investigations of banks.

BR-6.5.3

The CBB uses its own inspectors to undertake on-site examinations of licensees as an integral part of its regular supervisory efforts. In addition, the CBB may commission reports on matters relating to the business of licensees in order to help it assess their compliance with CBB requirements. Inspections may be carried out either by the CBB's own officials, by duly qualified appointed experts appointed for the purpose by the CBB, or a combination of the two.

BR-6.5.4

The CBB will not, as a matter of general policy, publicise the appointment of an appointed expert, although it reserves the right to do so where this would help achieve its supervisory objectives.

BR-6.5.5

Unless the CBB otherwise permits, appointed experts should not be the same firm appointed as external auditor of the bank.

BR-6.5.6

Appointed experts will be appointed in writing, through an appointment letter, by the CBB. In each case, the CBB will decide on the range, scope and frequency of work to be carried out by appointed experts.

BR-6.5.7

All proposals to appoint appointed experts require approval by an Executive Director or more senior official of the CBB. The appointment will be made in writing, and made directly with the appointed experts concerned. A separate letter is sent to the licensee, notifying them of the appointment. At the CBB's discretion, a trilateral meeting may be held at any point, involving the CBB and representatives of the licensee and the appointed experts, to discuss any aspect of the investigation.

BR-6.5.8

Following the completion of the investigation, the CBB will normally provide feedback on the findings of the investigation to the bank.

BR-6.5.9

Appointed experts will report directly to and be responsible to the CBB in this context and will specify in their report any limitations placed on them in completing their work (for example due to the bank's group structure). The report produced by the appointed experts is the property of the CBB (but is usually shared by the CBB with the firm concerned).

BR-6.5.10

Compliance by appointed experts with the contents of this Chapter will not, of itself, constitute a breach of any other duty owed by them to a bank (i.e. create a conflict of interest).

BR-6.5.11

The CBB may appoint one or more of its officials to work on the appointed experts' team for a bank.

BR-6.5.12

The scope of the required report will be determined and detailed by the CBB in the appointment letter. Commissioned appointed experts would normally be required to report on one or more of the following aspects of a bank's business:

BR-6.5.13

Appointed experts will be required to form an opinion on whether, during the period examined, the bank is in compliance with the relevant provisions of the CBB Law and the CBB's relevant requirements, as well as other requirements of Bahrain Law and, where relevant, industry best practice locally and/or internationally.

BR-6.5.14

The appointed experts' report should follow the format set out in Appendix BR-12, in part B of the CBB Rulebook.

BR-6.5.15

Unless otherwise directed by the CBB or unless the circumstances described in Section BR-6.5.19 apply, the report must be discussed with the Board of directors and/or senior management in advance of its being sent to the CBB.

BR-6.5.16

Where the report is qualified by exception, the report must clearly set out the risks which the bank runs by not correcting the weakness, with an indication of the severity of the weakness should it not be corrected. Appointed experts will be expected to report on the type, nature and extent of any weaknesses found during their work, as well as the implications of a failure to address and resolve such weaknesses.

BR-6.5.17

If the appointed experts conclude, after discussing the matter with the bank, that they will give a negative opinion (as opposed to one qualified by exception) or that the issue of the report will be delayed, they must immediately inform the CBB in writing giving an explanation in this regard.

BR-6.5.18

The report must be completed, dated and submitted, together with any comments by directors or management (including any proposed timeframe within which the bank has committed to resolving any issues highlighted by the report), to the CBB within the timeframe applicable.

BR-6.5.19

Appointed experts must communicate to the CBB, during the conduct of their duties, any reasonable belief or concern they may have that any of the requirements of the CBB, including the criteria for licensing a bank (see Module LR), are not or have not been fulfilled, or that there has been a material loss or there exists a significant risk of material loss in the concerned bank, or that the interests of customers are at risk because of adverse changes in the financial position or in the management or other resources of a bank. Notwithstanding the above, it is primarily the bank's responsibility to report such matters to the CBB.

BR-6.5.20

The CBB recognises that appointed experts cannot be expected to be aware of all circumstances which, had they known of them, would have led them to make a communication to the CBB as outlined above. It is only when appointed experts, in carrying out their duties, become aware of such a circumstance that they should make detailed inquiries with the above specific duty in mind.

BR-6.5.21

If appointed experts decide to communicate directly with the CBB in the circumstances set out in Paragraph BR-6.5.19, they may wish to consider whether the matter should be reported at an appropriate senior level in the bank at the same time and whether an appropriate senior representative of the bank should be invited to attend the meeting with the CBB.

BR-6.5.22

Information which is confidential and has been obtained under, or for the purposes of, this chapter or the CBB Law may only be disclosed by the CBB in the circumstances permitted under the Law. This will allow the CBB to disclose information to appointed experts to fulfil their duties. It should be noted, however, that appointed experts must keep this information confidential and not divulge it to a third party except with the CBB's permission and/or unless required by Bahrain Law.

BR-6.5.23

The CBB may, at its discretion, call for a trilateral meeting(s) to be held between the CBB and representatives of the relevant bank and the appointed experts. This meeting will provide an opportunity to discuss the appointed experts' examination of, and report on, the bank.

PD-A.1.5

This Module contains the CBB's Directive (as amended from time to time) relating to public disclosure and disclosure to shareholders and is issued pursuant to the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). It also incorporates the requirements of Article 62 of the CBB Law with respect to the publication of financial statements. The Directive in this Module is applicable to all Bahraini Islamic bank licensees (and overseas Islamic retail bank licensees where applicable).

PD-A.1.6

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

PD-A.4.3

The contents in this Module are effective January 2005 or from the effective date of the summary of changes as shown above in the above table. Changes to Chapter PD-6 are effective 1st January 2011.

PD-1.2.1

All Bahraini Islamic bank licensees must submit their annual audited financial statements to the CBB within 3 months of the end of the bank's financial year (as required by Article 62 of the CBB Law). Banks' annual audited financial statements must be audited by their external auditor.

PD-1.2.2

Banks are also required to place the full annual audited financial statements reports on their website (see also PD-1.3.10 (h)) within one week of submission to the CBB.

PD-1.2.3

Banks must publish extracts from their annual audited financial statements in one Arabic and one English daily newspaper within 2 months of the end of the financial year. The newspaper disclosures may be edited so that notes are not included, but must include at a minimum the statement of financial position (balance sheet), the statements of income, cash flow and changes in equity and where applicable, the statement of comprehensive income. The newspaper disclosures must be placed on the bank's website within one week of publication.

PD-1.2.4

The newspaper disclosures should include a reference to the fact that the published figures "have been extracted from financial statements audited by XYZ auditor, who expressed an unqualified opinion on (dated report)". Banks must disclose in full any audit qualifications or matter of emphasis paragraphs contained within the auditor's opinion. The auditor's opinion must be made in accordance with AAOIFI's Standards on Auditing and the International Standards on Auditing as established by the International Federation of Accountants (as appropriate).

PD-1.2.5

Banks must submit a newspaper copy of the published annual audited financial statements to the CBB within two business days of publication in the concerned newspapers clearly showing on which date and in which publications the statements were published.

PD-1.2.6

All Bahraini Islamic bank licensees must submit a soft copy (electronic) of their annual report to the CBB, including the full disclosures and appendices prescribed in this Chapter within 4 months of the end of the bank's financial year.

PD-1.2.7

Banks are also required to place the annual report with full disclosures and appendices on their website (see also PD-1.3.10(h)) within one week of submission to the CBB.

PD-1.2A.1

All overseas Islamic retail bank licensees must submit their annual audited financial statements to the CBB within 3 months of the end of the bank's financial year (as required by Article 62 of the CBB Law).

PD-1.2A.2

Banks must publish extracts from their audited annual financial statements in one Arabic and one English daily newspaper within 3 months of the end of the financial year. The newspaper disclosures may be edited, but must include at a minimum the statement of financial position (balance sheet), the statements of income and cash flow and where applicable, of comprehensive income.

PD-1.3.1

Banks (referred to under Paragraph PD-1.2.6 — hereafter referred to as "banks") should provide timely information which facilitates market participants' assessment of them. The disclosure requirements set out in this Section must be included in the Annual Report either as an Appendix or in the notes to the Audited Financial Statements at the discretion of the concerned bank. The disclosures should be addressed in clear terms and with appropriate details to help achieve a satisfactory level of bank transparency.

PD-1.3.2

The disclosure requirements listed in Paragraphs PD-1.3.4 to PD-1.3.31 below follow the requirements of Basel II Pillar 3 and are in addition to, or in some cases, serve to clarify the disclosure requirements of AAOIFI and/or IFRS as appropriate.

PD-1.3.3

If a bank is not able to achieve full compliance with the requirements stated in this Chapter, a meeting should be held with the Director of Islamic Financial Institutions Directorate at the CBB in the presence of the concerned external auditor to discuss the reasons for such non-compliance prior to the finalisation of the annual report. It is the responsibility of the bank to call for such meetings.

PD-1.3.4

Restricted investment accounts are to be reported off-balance sheet in the financial statements.

PD-1.3.5

Unrestricted investment accounts are to be reported on-balance sheet in the financial statements.

PD-1.3.6

The following information must be disclosed in relation to the parent bank (in Bahrain) and its banking and financial institution subsidiaries:

PD-1.3.7

The aggregate amounts (current book value) of the bank's total interests in insurance entities, which are risk-weighted rather than deducted from capital or subjected to an alternate group-wide methodology, as well as their name, their country of incorporation or residence, and the proportion of voting power in these entities must be disclosed (in relation to the parent bank). In addition, banks must disclose the quantitative impact on regulatory capital of using this method versus the deduction or alternate group-wide method.

PD-1.3.8

[This Paragraph was deleted in April 2016].

PD-1.3.9

The following information relating to the financial performance and position of the bank should be included:

PD-1.3.10

The following information relating to corporate governance must be disclosed in the annual report:

PD-1.3.10A

With regards to corporate governance, banks are subject to additional disclosure requirements on corporate governance, whereby such disclosures are for the benefit of shareholders (See Chapter PD-6)

PD-1.3.10B

In addition to the remuneration related disclosure included under Paragraph PD-1.3.10, the following qualitative and quantitative information pertaining to remuneration practices and policies covering the following areas must be disclosed in the annual report:

¹ This should include the bank's criteria for determining weak performance metrics.

² A description of the elements corresponding to other forms of variable remuneration must be provided.

PD-1.3.10C

The disclosure of remuneration practices must cover approved persons and material risk-takers and must be broken down as follows:

PD-1.3.10D

Disclosure requirements for items under Subparagraph PD-1.3.10B (n) to (u) must be provided for the current as well as for the previous financial year.

PD-1.3.10E

Disclosure requirements for items under Subparagraph PD-1.3.10B (o) and (p) may be presented in a table format split between members of the Board and other approved persons, as well as material risk-takers.

PD-1.3.10F

For purposes of Paragraph PD-1.3.10E, the table referred to should be completed separately for:

PD-1.3.10G

In instances where a bank has no approved persons or material risk-takers whose remuneration is in excess of BD100,000 as per Paragraph HC-5.4.2, the disclosure requirements under Subparagraphs PD-1.3.10B(f), (g), (l), (m), (t) and (u) are not required.

PD-1.3.11

All banks must disclose on their website summary descriptive information on the types, forms, terms and conditions of the main features of all capital- and equity-related instruments and unrestricted investment accounts listed below in PD-1.3.12, PD-1.3.13 and PD-1.3.15, especially in the case of innovative, complex or hybrid capital instruments. Full details of the required disclosures are given in Appendix PD-3.

PD-1.3.12

From 31^st December 2016 until 31^st December 2018, all banks must disclose with separate disclosures of individual items as detailed in Appendix PD-4 the following items:

PD-1.3.13

From 1^st January 2019, the disclosures referred to under Paragraph PD-1.3.12, must be made in accordance with Appendix PD-1.

PD-1.3.14

From 31^st December 2016, all banks must disclose a full reconciliation of all regulatory capital elements back to the balance sheet in the audited financial statements as required under Appendix PD-2.

PD-1.3.15

[This Paragraph was deleted in April 2016.]

PD-1.3.16

All banks must present a summary discussion of the bank's approach to assessing the adequacy of capital to support current and future activities both on a risk-based capital basis (i.e. as in Chapters CA-1 and CA-2). All banks must also disclose a description of the policy on identifying assets suitable for funding by unrestricted investment accounts.

PD-1.3.17

All banks must disclose the regulatory capital requirements for credit risk by each type of Islamic financing contract and for securitisation exposures (usually sukuk).

PD-1.3.18

All banks must disclose their capital requirements for market risk using the standardised approach.

PD-1.3.19

All banks must disclose their capital requirements for operational risk under:

PD-1.3.20

All banks must disclose their total and Tier One Capital Ratios on the following basis:

PD-1.3.21

All banks must describe their risk management objectives and policies for each separate risk area below and provide information on whether or not strategies used have been effective throughout the reporting period. The strategies, processes and internal controls (including internal audit) must be described for each area below along with the structure and organisation of the relevant risk management function, and the scope and nature of risk reporting systems and policies for hedging/mitigating risk and strategies for monitoring the continuing effectiveness of hedges/mitigants. There are also certain specific disclosures for each of these areas in addition to the general qualitative disclosures required by this paragraph.

PD-1.3.22

All banks must make the general qualitative disclosures outlined in PD-1.3.21 above, as well as those below:

PD-1.3.23

All banks must disclose the following, giving, where applicable, the percentages funded by the banks own capital and current accounts, and by Profit Sharing Investment Accounts (PSIA) respectively:

PD-1.3.24

For Paragraph PD-1.3.23, the following notes are provided:

PD-1.3.25

PD-1.3.26

All Bahraini Islamic bank licensees must make the following disclosures regarding counterparty credit risk:

PD-1.3.27

Banks must disclose the following items:

PD-1.3.28

All banks must disclose the general qualitative disclosures (PD-1.3.21) and also the approach(es) for operational risk which the bank employs to control such risk, and disclosures of any issues considered to be individually significant.

PD-1.3.29

The following additional qualitative disclosures (to Paragraph PD-1.3.21) should be made for operational risk:

PD-1.3.30

The following quantitative disclosures should be made for operational risk:

PD-1.3.31

All banks must make the following disclosures for any equities held in the Banking Book:

PD-1.3.32

The following qualitative disclosures should be made when the concerned Islamic bank has unrestricted investment accounts:

PD-1.3.33

The following quantitative disclosures should be made when the concerned Islamic bank has unrestricted investment accounts:

PD-1.3.34

The following qualitative disclosures should be made in addition to PD-1.3.32 (a) to (g) when the concerned Islamic bank has restricted investment accounts:

PD-1.3.35

The following quantitative disclosures should be made in addition to PD-1.3.33 (a) to (w) — excluding (p) when the concerned Islamic bank has restricted investment account:

PD-1.3.36

All banks must disclose a summary of the liquidity risk management framework used for assessing the risk exposure for each category of funding as well as on an aggregate basis:

Banks must also disclose the policy on diversity of funding sources to allow sufficient resources to Shari'a-compliant funds to mitigate liquidity risk.

PD-1.3.37

All banks must disclose the indicators of exposures to liquidity risk such as short-term assets to short-term liabilities, liquid asset ratios or funding volatility.

PD-1.3.38

Banks must disclose a maturity analysis of financing and various categories of funding (current account, unrestricted investment account and restricted investment account) by different maturity buckets.

PD-1.3.39

The following qualitative disclosures should be made for rate of return risk.

PD-1.3.40

The following quantitative disclosures should be made for rate of return risk.

PD-1.3.41

All banks must disclose the following regarding DCR:

PD-1.3.42

The following quantitative information about investments in foreign subsidiaries (as included in the Financial Statements Section and representing foreign currency translation risk) must be included in the Annual Report, supplemented by a discussion about:

PD-1.3.43

The annual report must include a declaration by the external auditor that it did not come across any violations of the requirements below during the course of its audit work that would have any material negative impact on the financial position of the bank:

PD-1.3.44

The Annual Report must disclose the amount of any penalties paid to the CBB during the period of the report together with a factual description of the reason(s) given by the CBB for the penalty (see Section EN-1.3). Bahraini Islamic bank licensees which fail to comply with this requirement will be required to make the disclosure in the annual report of the subsequent year and will be subject to an enforcement action for non-disclosure.

PD-1.4.3

Without prejudice to any other requirement of Bahrain law (or any other direction of the Central Bank), the Directors' Report Section of the annual report of banks should contain details of the interests of approved persons in the shares of such banks. Such details should include:

PD-1.4.4

For the purpose of the disclosure required under Paragraph PD-1.4.3, any interests in the shares of a bank held by the spouse(s) or children of an approved person, or any other person the control of whose interests in such shares lies ultimately with the approved person, shall be deemed to be the interests of the relevant approved person. For a definition of 'interest in the shares', see Paragraph PD-1.1.2(d).

PD-3.1.6

In addition to the requirements of Paragraphs PD-3.1.1 to PD-3.1.5, the following requirements apply to the Semi-Annual financial statements posted on banks' websites. Banks must make all the quantitative disclosures required by section PD-1.3 in the half-yearly financial statements on their website, within 2 months of the end of the half-yearly financial statements, but the qualitative disclosure requirements of the Paragraphs listed below may be dispensed with at the option of the bank in their half-yearly statements:

PD 3.1.7

Banks must retain an ongoing archive of all applicable public disclosures required by Sections PD-1 and PD-3, including the required appendices on their website. This archive must contain historical data (as required depending upon implementation date) for a minimum period of five years.

PD-5.1.1

[This Paragraph was deleted in April 2012].

PD-5.1.2

Non-listed Bahraini Islamic wholesale bank licensees may apply to the CBB to disclose their quarterly financial statements via the internet. If a bank wishes to cease disclosure of quarterly financial statements via the local press, it must satisfy the following criteria:

PD-5.1.3

[This Paragraph was deleted in April 2016.]