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STRONGER FINANCAL SECTOR

Consolidation push paying off for Bahrain banks

Manama, March 5, 2014

By Avinash Saxena

The Central Bank of Bahrain (CBB) has encouraged banking consolidation, which to date has resulted in the merger of 10 banks, creating stronger and well-capitalised financial institutions, said CBB Governor Rasheed Al Maraj.

Al Maraj was delivering his keynote address at the opening session of the 'Euromoney GCC Financial Forum' which opened yesterday (March 4) at the Ritz-Carlton Bahrain, Hotel and Spa.

The governor said the consolidation move was aimed at maintaining and improving stability in the banking sector, reported the Gulf Daily News, our sister publication.

The CBB's strategy for Islamic finance consisted of four parts - consolidation, regulations, human capital development and enhancement of market practices, it stated.

New regulations being introduced by the CBB include: A new solvency framework for the Takaful industry, new Sharia governance rules to complement Accounting and Auditing Organisation for Islamic Financial Institutions standards, business and market conduct rules to provide protection to investment account holders and depositors, rules designed to enhance the independence of risk managers, compliance officers, internal auditors, internal Sharia reviewers and anti-money laundering officers and new rules for offering of securities to address the technical aspects of Sharia compliance for public and private securities, said the GDN report citing Al Maraj.

As a part of human capital development, the CBB, the Waqf Fund and the Bahrain Institute of Banking and Finance were working together to provide training for the Islamic finance industry, he said.

"In line with this, the CBB has issued new modules on training and competency requirements for senior positions in licencees, including board members. These new rules require an increased level of knowledge, skills and experience for those who hold senior positions," he stated

The governor said for market practice enhancement, the CBB had advised all Islamic banks to seek rating.

"The Waqf Fund, in consultation with the CBB and the industry, has started to review practices on internal Sharia review, internal Sharia audit and, most importantly, external Sharia audit to improve consistency and transparency.

"The CBB requires full compliance to all Sharia principles and to fully disclose assets and liabilities which are not Sharia compliant," observed Al Maraj.

The regulator has urged all Islamic banks to use the standard documentation issued by International Islamic Financial Market on unrestricted wakalah transactions as a replacement for commodity murabaha.

"In addition to this, our framework for full implementation of Basel III continues apace, including the draft revised capital adequacy module. "Underpinning all of this are our recommendations for improving the corporate governance culture within our licencees," he added.-TradeArabia News Service




Tags: Bahrain | Takaful | CBB | forum |

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