CBB issued consultations on leverage ratio requirements and high-level controls modules for conventional and Islamic banks. Responses to the consultations must be sent by September 16, 2018. CBB also finalized new requirements on the risk management related and the liquidity risk management modules to the Rulebook Volumes 1 and 2. The risk management related modules went into effect from July 2018.
The following consultations and updates have been issued for conventional and Islamic banks in Bahrain:
- CBB issued second consultation on the leverage ratio requirement Chapter (CA-10) for Islamic bank licensees and Chapter (CA-15) for conventional bank licensees. The consultation is for addition of leverage ratio requirements to the Module CA of Volumes 1 and 2. CBB requests all Bahraini bank licensees, audit firms, and law firms to provide their comments, including "nil comments" on these proposed requirements. Banks are also required provide CBB with an impact assessment and leverage measures.
- CBB proposed amendments to Section HC-6.4 under the High Level Controls Module (Module HC) of Volumes 1 and 2 of the CBB Rulebook, which contains rules related to the compliance function in banks. CBB requests all banks, audit firms, and law firms to provide their comments, including "nil comments" on these proposed requirements.
- Following an industry consultation in April 2018, few risk management related modules to the Rulebook Volumes 1 and 2 have been issued. These modules include Domestic Systemically Important Banks Module (Module DS), Reputational Risk Management Module (Module RR), Internal Capital Adequacy Assessment Process Module (Module ICAAP), and Stress Testing Module (Module ST). The modules shall be available on CBB website under Volumes 1 and 2 in due course. These modules will be effective from July 2018. Annex to the notification letter sets out effective dates and the important deadlines that banks must comply with.
- After consulting the industry, CBB issued the new requirements related to liquidity risk management in Module LM for both Rulebook Volumes 1 and 2. The new requirements incorporate qualitative principles for sound liquidity risk management and supervisions by the Basel Committee, along with the Basel III standards on liquidity coverage ratio (LCR) and net stable funding ratio (NSFR). While the qualitative principles in Chapter LM-1 to LM-10 apply to all banks, the requirements for monitoring and reporting LCR and NSFR apply only to Bahraini banks. Requirements in Chapters LM-1 to LM-11 must be fully met by June 30, 2019 and the requirements in Chapter 12 must be fully met by December 31, 2019. Bahraini banks shall continue report LCR and NSFR ratios under the current arrangements, until the new rules become applicable. The modules shall be available on CBB website under Volumes 1 and 2 in due course.
CBB is proposing and adding these modules to the Rulebook Volumes 1 and 2, as part of the objective to enhance its regulatory framework and keep pace with the standards set by FSB and BCBS. Volume 1 contains guidance and directives for conventional banks whereas Volume 2 contains guidance and directives for Islamic banks.
- Consultation on Leverage Ratio: Notification (PDF)
- Volume 1: CA-15 (PDF)
- Volume 2: CA-10 (PDF)
- Consultation on Module HC: Notification (PDF)
- Volume 1: HC-6.4 (PDF)
- Volume 2: HC-6.4 (PDF)
- Liquidity Risk Management Module: Notification (PDF)
- Risk Management Related Modules: Notification (PDF)
Comment Due Date: September 16, 2018
Effective Date: July 2018
Keywords: Middle East and Africa, Bahrain, Banking, Islamic Banking, Liquidity Risk, Capital Adequacy, Stress Testing, Leverage Ratio, CBB