PCD-4.1 PCD-4.1 General Requirements
PCD-4.1.1
SPVs are subject to the consolidation, deduction, risk weighting and
qualifying holdings rules and regulations mentioned in this Module and Chapter CM-4.Amended: April 2014
Amended: January 2011
October 2010PCD-4.1.2
All
Bahraini Islamic bank licensees mustobtain 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. AllBahraini 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.Amended: April 2014
October 2010PCD-4.1.2A
For purposes of Paragraph PCD-4.1.2, 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.Added: April 2014PCD-4.1.3
The CBB requires any
Bahraini Islamic bank licensee associated with an SPV to confirm the following points in any request for approval under Paragraph PCD-4.1.2:(a) The purpose of the SPV;(b) The nature of the relationship between theBahraini Islamic bank licensee and the SPV (i.e. originator, sponsor, manager, investor, controller etc.);(c) The proposed consolidation/accounting treatment of the SPV in relation to theBahraini Islamic bank licensee both for the PIR and the audited financial statements' purposes as agreed with its external auditor;(d) The availability of financial and other information relevant to the SPV and access to its business premises and records;(e) Whether theBahraini Islamic bank licensee is providing any guarantees, warranties or financial/liquidity support of any kind to the SPV; and(f) A copy of the Bahraini Islamic bank licensee's Shari'a Supervisory Board approval of the initial investment or financing structure involving the use of the concerned SPV(s).Amended: April 2014
October 2010PCD-4.1.3A
In addition to the points noted in PCD-4.1.3,
Bahraini Islamic bank licensees which are involved with SPVs in any of the relationships described in Paragraph PCD-4.1.2 must not allow such SPVs to obtain any conventional financing to fund themselves or any transactions that they enter into.Added: April 2014PCD-4.1.3AA
For purposes of Paragraph PCD-4.1.3A, 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.
Added: April 2014PCD-4.1.3B
Bahraini Islamic bank licensees which are involved with SPVs in any of the relationships described in Paragraph PCD-4.1.2 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 theBahraini Islamic bank licensee .Added: April 2014PCD-4.1.3C
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 theBahraini Islamic bank licensee is involved (by way of the relationships described in Paragraph PCD-4.1.2). The Shari'a compliance function of theBahraini Islamic bank licensee must perform such reviews.Added: April 2014PCD-4.1.3D
Bahraini Islamic bank licensees which are involved with SPVs in any of the relationships described in Paragraph PCD-4.1.2 must not transfer non-performing or impaired assets from their own balance sheets to such SPVs or vice versa.Added: April 2014PCD-4.1.4
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.
October 2010PCD-4.1.5
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 locally incorporated banks 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.
Amended: April 2014
October 2010