MANAMA: Out of a total of 410 licensed banks and financial institutions, Bahrain has not reported a single case of bank failure during the economic meltdown, according to a senior official at the central bank.
“Bahrain has not bailed out a single financial institution by injecting direct cash or support from the government,” said Khalid Hamad, executive director of Banking Supervision at the Central Bank of Bahrain (CBB).
“Bahrain’s financial sector has shown a resilience to the economic upheaval due to the country’s expertise in banking and the implementation of the best regulatory framework. The economic turmoil has hit hard and in Bahrain we have been affected but the magnitude of losses was very low, thanks to the robust regulations enforced by the central bank,” he said. “Bahrain’s financial sector is built on very strong economic fundamentals and the 35 years continuous excellence achieved by Bahrain’s regulators yielded positive results during these critical times,” added Khalid.
“The CBB philosophy based on transparency and maintaining the highest levels of risk management especially for the locally incorporated banks and financial institutions. In 2006, the CBB required from the locally incorporated banks to outsource the risk management consultants. This has worked well and now it has paid off,” he said.
Similarly, Khalid continued, according to the CBB’s revised laws, the retail banks’ and wholesale banks’ minimum capital is increased to 100 million dinars and $100 million respectively. “This step has minimized the capital risks for the banks and provided a strong cushioning to the banks and financial institutions,” he added.
“The Central Bank of Bahrain has injected $150 million liquidity as part of an initiative aimed at making a sufficient liquidity available in the market during the tight credit market conditions,” he said.
“Bahrain, with 410 licensees, earned a good reputation and being the best regulated country makes this country a destination of choice for investors,” he said.
