MANAMA, 11 January 2005 — Bahrain’s financial services industry continued to develop and expand during 2004, with 23 new licenses issued by the Bahrain Monetary Agency (BMA).
This brought to 367 the total number of financial institutions licensed by the BMA by 2004-end.
“Bahrain continues to remain the location of choice for financial institutions in the Middle East region,” said Ahmed Al-Bassam, director, licensing and policy, at the BMA.
The region itself continues to offer tremendous growth prospects for financial service providers, particularly in the areas of asset management, life and medical insurance, securitization, Islamic banking and insurance, third part administration (TPA) services, leasing and investment services.
On its part, the BMA continues to undertake a number of regulatory and market development initiatives, to support the growth and advancement of the financial services industry.
During 2005, the BMA will introduce a new licensing framework, which will provide for greater flexibility for those wishing to do business in or from Bahrain.
The single license framework, which focuses on the activities to be undertaken rather than types of firms, will merge and enhance the different existing frameworks applied in the banking, insurance and capital markets sectors.
The new framework, which is currently under consultation with the industry, will mark a significant improvement on the existing system, in terms of transparency and consistency of approach.
“The new licensing framework takes into account the international trend toward financial convergence. The new system is intended to facilitate market innovation and provide greater flexibility to financial institutions in carrying out multiple lines of business.”
The new framework also reflects BMA’s role as single regulator for the financial services industry. For the banking sector, the new framework will essentially represent a re-labeling rather than a fundamental change in how they operate.
“However, for the insurance sector, particularly offshore firms, the new licensing framework, along with the new insurance rulebook, will require restructuring of operations. We expect this to result in a drop in offshore insurance licensees during 2005,” said Al-Bassam.
Of the new licenses issued during 2004, 17 were for banks and banking-related institutions and 6 for insurance and insurance-related operations.
At 2004-end, the total number of institutions licensed by the BMA stood at 367, comprising 189 banking institutions, 165 insurance firms and 13 capital market brokers.