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IC-1.5.2

Bahraini Islamic bank licensees must state their objectives in deciding how much capital to hold. Banks must ensure that the capital objectives go beyond the regulatory minimum to support risks and to take into account the following considerations:

(a) Level of creditworthiness of the bank to be achieved in markets, that is higher than that indicated by the minimum regulatory capital requirements;
(b) Fluctuations in capital adequacy ratios, as a result of changes in type and volume of activities and risk exposures in the normal course of business;
(c) Cost of capital-raising, especially in situations where capital injections need to be carried out quickly or at a time when market conditions are unfavourable;
(d) Potential breach of the minimum regulatory capital requirements and regulatory actions in such an event;
(e) Risks arising from the features of the jurisdictions and markets in which the bank operates; and
(f) Limitations in risk assessment infrastructure, and methodologies.
July 2018