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  • Prior approval for Major Investments

    • CM-2.10.1

      Bahraini conventional bank licensees must obtain the CBB’s prior written approval before making an investment in another commercial or financial entity (whether incorporated inside or outside of Bahrain) which falls within the definition of a major investment. Additionally, the CBB’s prior approval must be obtained for any subsequent increases in the licensee’s ownership in excess of 5% of similar exposure. Where the increase is due to a revaluation or change in capital of the licensee, a written notification outlining the percentage increase and reasons for the increase must be provided to the CBB.

      Added: June 2022

    • CM-2.10.2

      In assessing a proposed major investment, the CBB will take into account the impact of such investment on the risk profile of the licensee. See Appendix CM-5 for criteria for assessment.

      Added: June 2022

    • CM-2.10.3

      A major investment is defined as either of the following:

      (a) An investment in the capital instruments of another entity (whether financial or commercial) by a Bahraini conventional bank licensee which is equivalent to or more than 10% of the Bahraini conventional bank licensee’s consolidated Tier 1 capital; or
      (b) An investment in the capital instruments of a non-financial entity (commercial entity) which is equivalent to or more than 10 percent of the issued common share capital of the commercial entity.
      Added: June 2022

    • CM-2.10.4

      Any major investments by a Bahraini conventional bank licensee in the capital instruments of another entity must be included in the measure of an ‘exposure’ for the purposes of this Chapter, i.e. such major investments must be aggregated with all other facilities to a client for the purpose of calculating the level of ‘large exposures’. Where a percentage ownership increase results in the licensee exceeding the single large exposure limit, the 800 percent risk-weight rule must be applied (see CM-2.5).

      Added: June 2022

    • CM-2.10.5

      The CBB reserves the right to require Bahraini conventional bank licensees to dispose of any major investments acquired without its prior approval. Where a ‘major investment’ is acquired without the approval of the CBB, the entire value of the holding must be deducted from the consolidated total capital of the concerned licensee. Approval will not be given for ‘major investments’ in entities incorporated in jurisdictions where secrecy constraints exist, or there are restrictions on the passage of information to the bank (other than customer confidentiality requirements imposed by financial regulators).

      Added: June 2022

    • CM-2.10.6

      If the licensee’s close links with another entity prevent effective supervision of the licensee (or bank group), the CBB may refuse or revoke a license, or require the licensee to sell or otherwise dispose of entities within its corporate group, or to restructure the licensee.

      Added: June 2022