Regulatory Alerts2018-06-05
Proposed Risk Management Related Modules and Additional Requirements to High Level Controls Module for Banks
The Central Bank of Bahrain has issued four new risk management modules to its Rulebook, establishing specific requirements for Domestic Systematically Important Banks, reputational risk, internal capital adequacy, and stress testing. These modules apply to all Bahraini bank licensees or designated domestic systemically important banks, mandating framework submissions by September 2019 and ongoing reporting schedules starting in late 2019. Banks must align their operational frameworks with the prescribed timelines for annual and bi-annual submissions, independent third-party reviews, and recovery plan approvals as detailed in the attached annexure.
# Executive Director - Banking Supervision
EDBS/KH/44/2018
5th August, 2018
## Chief Executive Officers/General Managers
All Banks
Manama
Kingdom of Bahrain
Dear Sir,
### Risk Management Related Modules
Following the industry consultation process, the CBB is pleased to issue the following new Modules as part of Rulebook Volumes 1 and 2:
1. **Domestic Systematically Important Banks Module (Module DS)** dealing with the requirements to be fulfilled by Bahraini banks with regards to the specific obligations under the rules for those identified as systemically important and for recovery plans applicable to Bahraini bank licensees;
2. **Reputational Risk Management Module (Module RR)** which deals with risk management requirements for managing reputational risk, including step-in risk;
3. **Internal Capital Adequacy Assessment Process Module (Module ICAAP)** dealing with Pillar 2 requirements for Bahraini banks to assess material risks and the key principles of the supervisory review process; and
4. **Stress Testing Module (Module ST)** dealing with the key principles and expectations with regards to stress testing programme.
The Annexure attached to this circular sets forth the effective dates and the important deadlines that banks must comply with.
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**Central Bank of Bahrain**
The modules shall be available on the CBB website under Volumes 1 & 2 in due course.
Should you have any further queries on this matter, please contact your normal supervisory point of contact at the CBB.
Yours sincerely,
Khalid Hamad
cc: Bahrain Association of Banks
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## Annexure
The below table lists the important deadlines related to the new Modules:
| Module name | Effective/issuance date | Submission and approval of framework | Ongoing reporting under New Module | Independent 3rd party review of the framework | Applicability of Module |
|-------------|--------------------------|--------------------------------------|-------------------------------------|-------------------------------------------------|-------------------------|
| 1. ICAAP | July 2018 | 30th September 2019 | Annual submission of ICAAP on 31st May of each year starting from 2020. [Note: ICAAP for 2018 shall be under current arrangements and shall be submitted on 31st May 2019.] | Please refer to IC-1.6.1 | Bahraini bank licensees. |
| 2. RR | July 2018 | - | Annual submission of Step-in Risk Report on 30th September of each year starting from 2019. | - | All banks except for reporting step-in risk which is applicable to Bahraini bank licensees only. |
| 3. ST | July 2018 | - | Bi-annual submission of stress test results on 31st May and 30th November, starting from 30th November 2019. | Please refer to ST-1.8.1 | All banks, except for stress testing requirement, ICAAP, recovery planning and reverse stress testing which are applicable to Bahraini bank licensees. |
| 4. DSIB | July 2018 | - | Submission of RRP's of DSIBs selected by a due date to be specified by the CBB. | Please refer to DS-3.1.1 | DSIBs only except for Recovery plans which are applicable to all Bahraini bank licensees. |
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**Central Bank of Bahrain**
ص.ب: 27، المنامة - مملكة البحرين
هاتف: (+973) 17547400 - فاكس: (+973) 17532605
P.O. Box : 27, Manama - Kingdom of Bahrain
Tel: (+973) 17547400 - Fax: (+973) 17532605
website: www.cbb.gov.bh
E-mail: khalid.hamad@cbb.gov.bh
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