Regulatory Alerts2011-01-01
Proposed Approval Requirements for Major Acquisitions by Locally Incorporated Banks
The Central Bank of Bahrain (CBB) finalized prior approval thresholds for major acquisitions by locally incorporated conventional and Islamic banks, aligning domestic regulations with Basel Core Principle 5. The framework mandates CBB pre-approval for investments exceeding 10 percent of the acquiring bank’s capital or 20 percent of the target entity’s capital, while explicitly exempting temporary exposures, underwriting commitments, and collateral enforcement from strict qualifying holding rules. Implemented promptly for new investments with grandfathered existing holdings, the guidelines utilize post-deduction regulatory capital as the calculation base and establish a two-week CBB response window to prevent excessive risk concentration.
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