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IC-1.2.5

Bahraini conventional bank licensees must ensure that the outcome of the ICAAP is is forward looking (i.e. considers a minimum of 3-years projections) and not a static capital target. Banks must ensure that the ICAAP covers the following:

(a) All material risks and potential vulnerability to its business and operational environment;
(b) Capital requirements, benign and adverse forward-looking environment; and considers capital buffers during benign conditions to help meet any surge in capital demand under adverse conditions;
(c) A business plan and evaluattion of short-term and long-term capital needs;
(d) Rigorous stress-testing and scenario analysis that identifies possible events or changes in market conditions that could adversely impact the bank; and
(e) Results of stress tests and analyses are incorporated, where applicable, into the capital adequacy assessment.
July 2018