Regulatory Alerts2012-06-14
Enhancements to Basel II Framework and Revisions to the CBB Rulebook
The Central Bank of Bahrain (CBB) issued proposed revisions to its Rulebook (Volumes 1 & 2) implementing enhanced Basel II capital and market risk requirements for conventional and Islamic bank licensees. The amendments clarify trading book classification policies, standardize stressed value-at-risk calculations using approved historical stress periods, and expand prudent valuation guidance to cover both trading and banking book positions. Additionally, the CBB mandates comprehensive due diligence for securitization exposures, enforces mandatory multiplication factors for specific risk capital charges under internal models, and requires weekly stress testing while maintaining a cost-benefit balance across standardized and internal rating-based approaches.