PD-A.1.1

The purpose of this Module is to set out the detailed qualitative and quantitative public disclosure requirements and disclosure to shareholders that banks should adhere to in order to enhance corporate governance and financial transparency through better practice in public disclosure. Such disclosures also help to protect customers and facilitate market discipline.

PD-A.1.2

This module provides support for certain other parts of the Rulebook, namely:

PD-A.1.3

This Module also provides support for certain aspects relating to disclosure requirements stipulated in the Central Bank of Bahrain and Financial Institutions Law (Decree No. 64 of 2006) and the Bahrain Commercial Companies Law (as amended).

PD-A.1.4

The Central Bank of Bahrain's ('CBB') disclosure requirements (in this Module) vary according to whether the concerned bank is a Bahraini Islamic bank licensee (PD-1 and PD-3) or is an overseas Islamic retail bank licensee (PD-2).

Legal Basis

PD-A.2.1

All Bahraini Islamic bank licensees must have a formal disclosure policy, inclusive of Shari'a issues, as part of their overall communications strategy approved by the Board of Directors (and supported by documented procedures) that addresses the disclosures that the bank makes and the internal controls over the disclosure process. In addition, all Bahraini Islamic bank licensees must carry out an annual review of the validity of their disclosures (in terms of scope and accuracy) as outlined in Sections BR-5.2 and AU-3.2.

PD-A.2.2

All Bahraini Islamic bank licensees are required to publish their annual audited and reviewed quarterly financial statements per the rules set out in this Module and the CBB Law, Bahrain Commercial Companies Law (as amended), the Rulebook of the licensed exchange and Volume 6 (Capital Markets), where applicable. Such financial statements must be prepared in accordance with the Financial Accounting Standards (FAS) issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). When there are no specific accounting standards under AAOIFI, Islamic banks must use International Financial Reporting Standards (IFRS). Listed banks must refer to Paragraph PD-A.2.6.

PD-A.2.3

The CBB requires that each bank maintain an up-to-date checklist of all applicable AAOIFI standards and IFRS (where applicable) and also the disclosure requirements set out in this Module for full compliance purposes. Such checklists should be part of the bank's public disclosure procedures.

PD-A.2.4

The disclosure requirements specified in Chapters 1, 3 and 6 of this Module, which are in addition to those required by applicable accounting standards, must be reviewed by the bank's external auditor based upon agreed upon procedures (unless AAOIFI Standards or IFRS require that the concerned disclosures are audited). See also BR-1.1, BR-2.2 and AU-3.1 for more details.

PD-A.2.4A

The disclosure requirements mentioned in Paragraph PD-A.2.4 must be presented as an accompanying document or appendices to the Annual Report or in the Notes to the Financial Statements.

PD-A.2.5

The external auditor must also review other statements in the Annual Report (such as the Chairman's report) to ensure that such statements are consistent with the audited financial statements and the disclosures required by this Module. All qualitative or descriptive disclosures in the Annual Report must be based upon, and be reflective of, the facts and actual practice employed by the bank (and be subject to the above review by the bank's external auditor).

PD-A.2.6

If situations arise where disclosures required in this Module are in conflict with those required under AAOIFI Standards and IFRS and/or any listing requirements issued by the CBB or a licensed exchange, listed banks should first follow the CBB's requirements as contained in Volume 6 (Capital Markets). Unlisted banks should first follow AAOIFI standards. In such situations, banks should explain any material differences between the accounting or other disclosures and the disclosure required in this Module. This explanation does not have to take the form of a line by line reconciliation, but should provide stakeholders with sufficient detail to make an objective assessment of the bank's financial and operational health. Moreover, a formal notification to the CBB is required in such a situation.

PD-A.2.7

The bank should decide which disclosures are relevant for it based on the materiality concept and subject to the concurrence of the bank's external auditor. For the bank's guidance, information would be regarded as material if its omission or misstatement could change or influence the assessment or decision of a user relying on that information for the purpose of making economic decisions.

PD-A.2.8

Non-compliance with these disclosure requirements could lead to enforcement actions as outlined in Module EN (Enforcement).

PD-A.2.9

The disclosures referred to in this Module must be made at the top consolidated level of a banking group (i.e. at the level of the parent bank in Bahrain). Disclosures related to individual banks within a banking group will be required where listing requirements or differing accounting requirements necessitate such separate disclosure.

PD-A.2.10

With effect from 31^st December 2016, Bahraini Islamic bank licensees must follow a 3-step approach to provide a full reconciliation of all regulatory capital elements back to the published financial statements.

PD-A.2.10A

The 3-step approach is not based on a common template because the starting point for reconciliation, the bank's reported balance sheet, may vary slightly in composition from bank to bank. Full details of the reconciliation process and associated disclosures are provided in Appendix PD-2.

PD-A.2.11

With effect from 31^st December 2016, Bahraini Islamic bank licensees must use a common template to provide a description of the main features of regulatory capital instruments issued. Full details are provided in Appendix PD-3.

PD-A.2.12

With effect from 31^st December 2016, Bahraini Islamic bank licensees must disclose the full terms and conditions of all outstanding regulatory capital instruments on their website.

PD-A.2.13

With effect from 31^st December 2016, Bahraini Islamic bank licensees must use a modified version of the post 1 January 2019 template mentioned in Paragraph PD-A.2.15 until 31 December 2018. This template is established to disclose the components of capital that are benefiting from the transitional arrangements. The template and accompanying notes are provided in Appendix PD-4.

PD-A.2.14

[This Paragraph has been left blank].

PD-A.2.15

With effect from 1 January 2019, Bahraini Islamic bank licensees must use a common template (set out in Appendix PD-1) to report the breakdown of their regulatory capital when the transition period for the phasing-in of deductions ends. The template is designed to disclose all regulatory adjustments, including amounts falling below thresholds for deduction, and thus enhance consistency and comparability in the disclosure of the elements of capital between banks and across jurisdictions.

PD-A.3.1

Proprietary information encompasses information (for example on products or systems), that if shared with competitors would render a licensed bank's investment in these products/systems less valuable, and hence would undermine its competitive position. Information about customers is often confidential, in that it is provided under the terms of a legal agreement or counterparty relationship. This has an impact on what banks should reveal in terms of information about their customer base, as well as details on their internal arrangements, for instance methodologies used, parameter estimates, data etc.

PD-A.3.2

[This Paragraph was deleted in April 2016.]

PD-A.4.1

This module was first issued in January 2005 as part of the Islamic principles volume. All regulations in this volume have been effective since this date. 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.

PD-A.4.2

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

Effective Date

PD-B.1.1

[This Section was deleted in April 2016.]

PD-1.1.1

The purpose of this Chapter is to set out the CBB's requirements relating to the disclosure of information in the annual audited financial statements ('Annual Report') of Bahraini Islamic bank licensees as well as for overseas Islamic retail bank licensees. This Chapter also refers to the Bahrain Commercial Companies Law (as amended) and the Rulebook of the licensed exchange relating to public disclosure and reporting requirements.

PD-1.1.2

For the purpose of this Chapter, the following definitions apply:

Submission of Annual Audited Financial Statements

Publication of Annual Audited Financial Statements

Submission of Annual Report

Submission of Annual Audited Financial Statements

Publication of Annual Audited Financial Statements

Introduction

Investment Accounts

Scope of Application — Qualitative Disclosures

Scope of Application — Quantitative Disclosures

Financial Performance and Position

Corporate Governance and Transparency

Additional Disclosure Requirements Pertaining to Remuneration

Capital Structure — Qualitative Disclosures

Capital Structure — Quantitative Disclosures

Capital Adequacy

Risk: General Qualitative Disclosure Requirements

Credit Risk — Qualitative Disclosures

Credit Risk — Quantitative Disclosures

Credit Risk Mitigation: Disclosure Requirements

Disclosures Related to Counterparty Credit Risk (CCR)

Market Risk Disclosures for Banks

Operational Risk Disclosures

Operational Risk Qualitative Disclosures

Operational Risk Quantitative Disclosures

Disclosure Requirements for Equity Positions in the Banking Book

Unrestricted Investment Accounts: Qualitative Disclosures

Unrestricted Investment Accounts: Quantitative Disclosure Requirements

Restricted Investment Accounts: Qualitative Disclosure Requirements

Restricted Investment Accounts: Quantitative Disclosure Requirements

Liquidity Risk Qualitative Disclosures

Liquidity Risk Quantitative Disclosures

Rate of Return Risk Qualitative Disclosures

Rate of Return Risk Quantitative Disclosures

Displaced Commercial Risk (DCR) Disclosures

Disclosures Concerning other Risks

Compliance Disclosures

PD-1.3A.1

All branches of foreign bank licensees must disclose in their annual audited financial statements 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). Branches which fail to comply with this requirement will be required to make the disclosure in the annual audited financial statements of the subsequent year and will be subject to an enforcement action for non-disclosure.

PD-1.4.1

The content of this Section is applicable only to Bahraini Islamic bank licensees listed on a licensed exchange.

PD-1.4.2

The disclosure requirements set out in this Section for banks referred to under Paragraph PD-1.4.1 are in addition to those set out in Section PD-1.3.

Interests of Approved Persons

PD-1.5.1

Where a bank chooses to issue a narrative press release in conjunction with or in relation to the publication of its audited annual financial statements as required under Paragraph PD-1.2.3, the press release must indicate the net income for the last quarter.

PD-2.1.1

[This Paragraph was deleted in April 2016].

PD-2.1.2

Overseas Islamic retail bank licensees are required by the CBB to prepare and disclose to the public the following reviewed information (in the same format as their Annual Audited Accounts) for their Bahrain operations on a semi-annual (interim) basis:

PD-2.1.3

The statements referred to under Paragraph PD-2.1.2 must be reviewed by the bank's external auditor, in accordance with International Standards on Auditing (ISA) applicable to Review engagements.

PD-2.1.4

The statements referred to under Paragraph PD-2.1.2 must be published in one local newspaper within 2 months from the statements' date.

PD-2.1.5

Banks must submit a newspaper copy of the statements (referred to under Paragraph PD-2.1.2) to the CBB within two business days of publication from the statements' date clearly showing on which date and in which publication(s) the statements were published.

PD-3.1.1

[This Paragraph was deleted in April 2016].

PD-3.1.2

Bahraini Islamic bank licensees must prepare reviewed (unaudited) quarterly financial statements in accordance with AAOIFI Standards (and IFRS where applicable) for the first three quarters of their financial year.

PD-3.1.3

Banks' unaudited quarterly financial statements must be reviewed by their external auditor who must also make a statement regarding the results of such review. Such review and statement must be made in accordance with the applicable AAOIFI standards and/or International Standards on Review Engagements.

PD-3.1.4

Extracts from the reviewed quarterly financial statements (including at least the statement of financial position (balance sheet), the statements of income, cash flows and changes in shareholders' equity as required by AAOIFI Standards must be published in one Arabic and one English daily newspaper widely available in Bahrain and on the bank's website within 45 calendar days of the end of the quarter to which such statements relate. (See Paragraph PD-5.1.2 for non-listed Bahraini Islamic wholesale bank licensees).

PD-3.1.5

Banks must submit a newspaper copy of the statements (referred to under Paragraph PD-3.1.4) to the CBB within two business days of publication clearly showing on which date and in which publication(s) the statements were published.

PD 3.1.5A

Banks must publish the disclosures required by Appendices PD-1 to PD-4 (as mentioned in Section PD-A.2) on their website in accordance with the deadline required under Paragraph PD-3.1.4.

Additional Requirements for Semi Annual Disclosures

PD-3.2.1

Newly-established banks are not required to follow the publication requirements of sections PD-3.1 for the first three quarters of their operation or until the commencement of their second financial year of operation (whichever period is the longer).

PD-3.2.2

After the above period has expired, all newly-established Bahraini Islamic bank licensees must follow the publication requirements of Section PD-3.1. Newly-established banks must follow the requirements for annual reporting.

PD-3.3.1

Islamic retail bank licensees must disclose open banking API performance statistics in accordance with Appendix PD-6 on their websites within one month of each quarter end.

PD-4.1.1

The purpose of the contents of this Chapter is to set out the CBB's requirements relating to other public disclosure of information by the banks, not covered in Chapters PD-1 to PD-3.

PD-4.2.1

[This Paragraph was deleted in October 2012]

PD-4.2.2

[This Paragraph was deleted in October 2012]

PD-4.3.1

The content of this Section is applicable to all retail banks licensed by the CBB.

PD-4.3.2

The CBB requires all retail banks to display, by a conspicuous notice, their scale of charges on BD short-term revolving facilities to commercial customers.

PD-4.3.3

[This Paragraph was deleted in April 2016.]

PD-4.3.4

Retail banks are left free to decide their own basis of charging and to make changes to it as they consider appropriate.

PD-4.3.5

Retail banks must display a list of current charges including any standard charges and commissions that will be applied by the bank to individual services and transactions. See Section BC-4.2 for further details.

PD-4.4.1

The content of this Section is applicable to all retail banks licensed by the CBB.

PD-4.4.2

The CBB requires all retail banks referring (directly or indirectly) to the protection of deposits in related marketing materials and in general notices featured within banking halls and in account documentation, including the Annual Report, to prominently disclose the following statement:

PD-4.4.3

Retail banks must, in discussions and/or correspondence with new and prospective customers, bring the Deposit and Unrestricted Investment Accounts Protection Scheme and the protection afforded by it to the customer's notice.

PD-4.4.4

The CBB welcomes the introduction by the banks, at their discretion, of other appropriate means to promote the Deposit and Unrestricted Investment Accounts Protection Scheme as prominently as possible.

PD-4.4.5

For detailed guidance on the Deposit and Unrestricted Investment Accounts Protection Scheme's documentation requirements, see Chapter CP-2.

PD-4.5.1

The content of this Section is applicable to all Bahraini Islamic bank licensees.

PD-4.5.2

Bahraini Islamic bank licensees must obtain the CBB's prior approval before issuing any press releases regarding interim or annual financial statements. Bahraini Islamic bank licensees must not publish or cause to be published, any media statements until such times as CBB approval has been granted.

PD-4.5.3

In implementing Rule PD-4.5.2, the CBB will provide the Bahraini Islamic bank licensee with a written decision within two business days of the receipt of request for approval.

Existing Requirements

Criteria for Application for Disclosure via the Internet

PD-6.1.1

In addition to the corporate governance disclosure required under Paragraph PD-1.3.10, banks must also disclose to their shareholders the following information:

PD-6.1.2

Islamic bank licensees must disclose in the annual report any abstention from voting motivated by a conflict of interest and must disclose to its shareholders any authorisation of a conflict of interest contract or transaction in accordance with the Company Law.

PD-6.1.3

Islamic bank licensees must publish a summary of their internal corporate governance policies on their website.