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  • CM-5 CM-5 APPENDIX

    • Appendix CM-5 CBB Illustrative Criteria for Assessment of Major Investments by Bahraini Islamic bank licensees

      In assessing any proposed major investments mentioned above, the CBB will take into account the following points:

      (a) The amount of the proposed major investment relative to the existing consolidated total capital of the licensee;
      (b) Existing capital adequacy ratios on a consolidated basis and forecast ratios after the major investment has gone ahead;
      (c) The adequacy of information flows from the investee company to the concerned bank;
      (d) Experience, and fit and proper matters relating to the senior personnel associated with the proposed major investment;
      (e) Risks associated with the proposed major investment;
      (f) Disclosure and exchange of (supervisory) information (in the case of a foreign major investment);
      (g) Adequacy of host supervision (in the case of a foreign major investment);
      (h) Current investments and concentrations in exposures of the concerned bank.
      (i) The compliance of the concerned bank with the CBB’s rules and regulations (e.g. reporting issues), and the adequacy of internal systems and controls;
      (j) The extent of holdings by any other shareholders (holding 5 percent or more of the capital of the concerned entity) or controllers of the concerned entity;
      (k) Whether the proposed activities are in line with the memorandum and articles of association (‘MOA’ and ‘AOA’) of the licensee;
      (l) The accounting treatment of the proposed major investment;
      (m) Whether the major investment relates to a closely-linked party, connected party, or controller in any way;
      n) The existence of secrecy laws or constraints over supervisory access to the premises, assets, books and records of the concerned entity in which a ‘major investment’ is being acquired;
      (o) The impact and extent of goodwill and intangibles upon the capital adequacy and balance sheet of the licensee on a consolidated basis; and
      (p) The licensee’s existing and forecast liquidity position (as a result of the major investment) and how the major investment is to be funded (e.g. by the issuance of new capital or sale of other investments).
      Added: June 2022