Limit on Exposures to connected counterparties – 25 Percent Aggregate
CM-2.5.9
Exposures to connected counterparties ofBahraini conventional bank licensees may be justified only when undertaken for the clear commercial advantage of thelicensee , when negotiated and agreed on an arm’s-length basis, and when included in the LargeExposures Policy statement.Amended: October 2022
Added: June 2022CM-2.5.10
A
Bahraini conventional bank licensee may not exceed the individual or aggregate limits for exposures to connectedcounterparties shown in Paragraph CM-2.5.15, without the prior written approval of the CBB.Added: June 2022CM-2.5.11
The
licensee may not undertakeexposures to its own external auditor. In this context, ‘external auditor’ refers to the firm/partnership, the partners, the directors and the managers of the audit firm.Added: June 2022CM-2.5.12
For the purpose of this Module, ‘connected counterparties’ include legal and natural persons connected with the
Bahraini conventional bank licensee , including, in particular;controllers of thelicensee (and Board members, senior management and key staff of thecontroller , thecontroller’s appointed Board representatives, subsidiaries and associated companies ofcontrollers including their Board members, senior management and key staff), approved persons of thelicensee , as defined by Module LR-1A, and their close family members (as defined by IFRS – IAS 24); associated companies not mentioned hereinabove, unconsolidated subsidiaries and members of the Shari’a Supervisory Board (‘SSB’), if any.Added: June 2022CM-2.5.13
Equity participations in, and credit exposures to, consolidated banking and financial subsidiaries (see CA-2.3.1(c)) need not be included in exposures to connected
counterparties for the sake of the table in CM-2.5.15. Equity participations in, and credit or financing exposures to, unconsolidated subsidiaries are included in the definition of exposure in order to understand the degree of support the parent is supplying to its unconsolidated subsidiaries on a day-to-day basis.Added: June 2022CM-2.5.14
The CBB will exercise its discretion in applying the definition of connected
counterparties of thelicensee on a case-by-case basis, if it finds during its onsite or offsite supervisory review any linkage of suchcounterparties .Added: June 2022CM-2.5.15
Exposures (both on and off-balance sheet) to all connectedcounterparties ofBahraini conventional bank licensees listed below, when taken together, may not exceed 25 percent of the Total consolidated capital. Where any of these limits have been exceeded, the excess amount must be risk-weighted at 800 percent.Connected Counterparties Individual Limit Aggregate Limit Controllers and their close family members as defined in IFRS, and Board members, senior management and key staff of thecontroller , thecontroller ’s appointed Board representatives,subsidiaries and associated companies ofcontrollers including their Board members, senior management and key staff0% 0% Approved persons (and their close family members as defined in IFRS) and members of the SSB10% 25% Associated companies not mentioned hereinabove, other connected counterparties not mentioned above, and unconsolidated subsidiaries15% Total (including senior management and others) 25% Added: June 2022
