Regulatory Alerts2011-01-01
Second Consultation Paper on Proposed Amendments to Large Exposure Limits for Licensed Banks
The Central Bank of Bahrain issued this feedback statement to finalize amendments requiring licensed conventional and Islamic banks to obtain prior regulatory approval for underwriting and temporary investment exposures exceeding the standard 15 percent single counterparty limit. The updated framework establishes a maximum ninety-day holding period, capping approved underwriting exposures at 30 percent and temporary investment exposures at 25 percent of each bank’s consolidated capital base. By eliminating imprudent blanket exemptions and mandating aggregated risk assessment alongside board-approved due diligence procedures, the rules ensure prudent capital management while maintaining competitive flexibility for large-scale securities and syndicated loan transactions.