Featured Product

    CBB Consults on Liquidity Risk Module and SME Financing Requirements

    March 25, 2021

    CBB proposed requirements on financing for small and medium-size enterprises (SMEs), the consultation period for which ends on April 01, 2021. As part of this consultation, CBB proposed to require all retail banks to ensure (incrementally), by December 31, 2025, that financing for SMEs accounts for at least 20% of their domestic financing portfolio and to create a separate department or unit that is dedicated to SME financing. CBB also launched a consultation to amend the liquidity risk management module (Module LM) of the Rulebook for both conventional (Volume 1) and Islamic (Volume 2) banks; the comment period for this consultation ends on April 22, 2021.

    With respect to the enhancement of liquidity risk requirements, CBB proposed to introduce a new chapter on "Loan to Deposit Ratio" within Module LM of the CBB Rulebook Volume 1 for conventional retail bank licensees. Conventional retail bank licensees must ensure that their loan-to-deposit ratio does not exceed 75% percent at all times. Bahraini conventional retail bank licensees must compute the ratios on a “solo” basis and on a “consolidated” basis. Branches of foreign banks must compute this ratio for the Bahrain operations (that is, on a “branch level” basis). The ratios must be computed using the month end balances. If a breach of the loan-to-deposit ratio is observed due to unexpected withdrawals of nonbank deposits, the conventional retail bank licensee must notify CBB immediately and present a plan within 14 calendar days describing the measures it will take to restore the LTD ratio to be within 75%. Conventional retail bank licensees must report their loan-to-deposit ratios on a quarterly basis in their PIR reports. 

    With respect to Rulebook Volume 2 for Islamic retail bank licensees, CBB proposed to introduce, to Module LM, a chapter on "Financing to URIA and Current Account Ratio." These banks must ensure that their financing to Unrestricted Investment Account (URIA) and current account (FTUCA) ratio does not exceed 75% at all times. Bahraini Islamic retail bank licensees must compute the ratios on a “solo” basis and on a “consolidated” basis. Branches of foreign banks must compute this ratio for the Bahrain operations. The ratios must be computed using the month-end balances. If a breach of the FTUCA ratio is observed due to unexpected withdrawals of URIAs and current accounts, the Islamic retail bank licensee must notify CBB immediately and present a plan within 14 calendar days describing the measures it will take to restore FTUCA ratio to be within 75%. Islamic retail bank licensees must report their FTUCA ratios on a quarterly basis in their PIRI reports.

     

    Related Links

    Comment Due Date: April 22, 2021 (Module LM)/April 01, 2021 (SME Financing)

    Keywords: Middle East and Africa, Bahrain, Banking, Islamic Banking, Module LM, Liquidity Risk, Loan-to-Deposit Ratio, ALM, Basel, Reporting, SME Financing, CBB

    Featured Experts
    Related Articles
    News

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News
    News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News
    News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News
    News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News
    News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News
    News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News
    News

    DNB Publishes Multiple Reporting Updates for Banks

    DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.

    February 28, 2023 WebPage Regulatory News
    News

    NBB Sets Out Climate Risk Expectations, Issues Reporting Updates

    The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting

    February 24, 2023 WebPage Regulatory News
    News

    EBA Updates Address Securitization Standards and DGS Guidelines

    The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.

    February 21, 2023 WebPage Regulatory News
    News

    FSB Publishes Letter to G20, Sets Out Work Priorities for 2023

    The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023

    February 20, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8793