CBB published a circular introducing, with immediate effect, certain regulatory measures and relaxations, for a period of six months from the date of the circular, to contain the financial repercussions of COVID-19 outbreak. Until further notice, CBB has decided to postpone all the announced regulatory policy initiatives, except the E-KYC rules in the Financial Crime Module. Furthermore, CBB has decided to extend the deadline, to June 30, 2021, for compliance with the revised Operational Risk Modules (Volumes 1 and 2) that were issued on December 31, 2019.
The regulatory measures and relaxations introduced by CBB for a period of six months include the following:
- Retail banks, finance companies, and micro-finance companies must offer any impacted borrower six-month deferral of installments at no fees, no interest on interest, and no increase in rate, unless the borrower agrees for a shorter period.
- For Stage 1 expected credit loss (ECL), the number of days past due, excluding the deferrals mentioned above, must be increased up to 74 days, with effect from February 01, 2020.
- Cooling off period for reclassifying restructured credit facilities from Stage 3 to Stage 2 is reduced from 12 months to 3 months.
- Liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) limits for all locally incorporated banks have been reduced from 100% to 80%.
- Risk-weight for capital adequacy purposes for Bahrain-based small and medium enterprises has been reduced from 75% to 25%.
- Retail banks and financing companies must relax their loan-to-value (LTV) ratio for new residential mortgages for Bahrainis.
- Cash reserve ratio for retail banks is reduced from 5% to 3%.
The above regulatory measures and relaxations are subject to review by CBB at the end of six month period. CBB has also released implementation guidelines regarding the six months deferral.
- Regulatory Measures and Relaxations
- Deferral of Implementation of Policy Initiatives
- Implementation Guidelines, March 23, 2020
- Implementation Guidelines, March 24, 2020
Keywords: Middle East and Africa, Bahrain, Banking, COVID-19, LCR, NSFR, Operational Risk, ECL, Residential Mortgage, IFRS 9, Credit Risk, Regulatory Capital, CBB
Previous ArticleBundesbank Circular Sets Out Changes Related to AnaCredit Reporting
EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.
EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT).
NGFS published a paper on the overview of environmental risk analysis by financial institutions and an occasional paper on the case studies on environmental risk analysis methodologies.
MAS published the guidelines on individual accountability and conduct at financial institutions.
APRA published final versions of the prudential standard APS 220 on credit quality and the reporting standard ARS 923.2 on repayment deferrals.
SRB published two articles, with one article discussing the framework in place to safeguard financial stability amid crisis and the other article outlining the path to a harmonized and predictable liquidation regime.
FSB hosted a virtual workshop as part of the consultation process for its evaluation of the too-big-to-fail reforms.
ECB updated the list of supervised entities in EU, with the number of significant supervised entities being 115.
OSFI published the key findings of a study on third-party risk management.
FSB is extending the implementation timeline, by one year, for the minimum haircut standards for non-centrally cleared securities financing transactions or SFTs.