MANAMA, 26 October 2007 — In the backdrop of high liquidity in the Arab region and with a collective wealth of high net worth individuals (HNWIs) estimated at $1.3 trillion and forecast to grow to $1.8 trillion by 2010, the Central Bank of Bahrain (CBB) has created, for the first time, a new license aimed at facilitating the conduct of private banking business from Bahrain.
The Private Banking License caters to all activities related to banking, investment and financial services targeting HNWIs, with liquidity of at least $1 million.
CBB’s private banking licenses will be allowed to undertake a wide range of wealth and asset management services, including investment and advisory services, wealth management, financing and banking services, as well as inheritance and succession planning.
The new license is a sub-category of CBB’s wholesale banking license category, said Ahmed Abdul Aziz Al-Bassam, director, Licensing and Policy, at the CBB.
“The creation of the new license comes within CBB’s established policy of ensuring Bahrain’s pre-eminence as a financial center and enabling CBB licenses to meet the evolving needs of their customers.”
Regulated activities under CBB’s Private Banking license comprise investment services, namely, investment advisory and discretionary services, wealth management and planning, fiduciary services, wealth solutions and trust services, financing and banking (for non-residents only), banking services (such as current account and credit card facilities), providing credits and loans and accepting deposits.
It also offers specialist advisory services, like family office advisory, corporate finance advisory, wealth and tax advisory and specialist property services. “The CBB remains cognizant of the dynamic nature of the financial services industry and is committed to supporting the continued growth and advancement of financial institutions based in Bahrain,” he said.
The new license, which is the first of its kind in Bahrain, will considerably facilitate the conduct of banking services targeting high net worth individuals, who require a sophisticated level of service. “Such services are assuming increasing significance due to the economic boom currently underway in the GCC region and the wider Middle East region.”
“The creation of a license category, specific to private banking services, is aimed at encouraging international and leading regional banks to offer sophisticated wealth management services, such as trusts and succession planning, family offices and investment advisory,” he said.
The new CBB license will provide market players a better measure of operational agility to deliver the increasingly higher levels of service demanded by increasingly sophisticated clients, Al-Bassam said.
The enactment in 2006 of a Trust Law in Bahrain has also broadened the scope for private banks to take a more holistic approach to wealth management by also offering non-financial services, such as trusts. “Bahrain is already host to a number of leading international and regional financial institutions specializing in wealth management,” Al-Bassam said.