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Bahrain for banking reforms

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Points of Essence:

  • Bahrain is reforming its banking regulation to stay ahead of its competitors.
  • New regulations have been issued to develop its banking sector.
  • Bahrain has now more than 400 financial institutions operating in the Kingdom.

Bahrain is striving to improve banking regulations to face any competition, a Bahraini Central Bank official has said.

Yousif Hassan Yousif, director of retail banking at the Central Bank of Bahrain, said the Gulf state has issued new rules and regulations to develop its financial sector, including improvement of market transparency.

He was asked about what he thought of the growing regional competition in the banking sector, mainly from Dubai and Qatar.

“Competition is healthy… we are not afraid,” he told Oxford Business Group in its economic and political report about the Gulf island.

According to the report, Bahrain has over the past three decades built up a massive banking sector, with just more than 400 financial institutions operating in the Kingdom, ranging from international conduits servicing petrochemical corporates to specialised large-scale project investment banks to local lenders.

“The importance of this sector looks set to carry on growing. It currently contributes 25 per cent of the country’s gross domestic product but, as oil reserves dwindle, the hope is that it will carry on along the upward trajectory that saw assets rising 34 per cent in 2006,” the report said.

“Indeed the Central Bank is facing up to the competition by improving market conditions through adjustments to its rules and regulations, establishing, for example, a code of best practice on consumer credit and charging,” it said.

“Looking to the future, Bahrain’s banking sector looks set to continue in rude health through continued strong leadership, unique access to the sizeable Saudi Arabian market, a talented labour pool, 72 per cent of which is composed of Bahraini nationals, and a liberal social environment.”

Citing other Bahraini officials, the report said the Islamic finance industry is also recording rapid growth in Bahrain following the issuance of new licences.

Its figures showed Bahrain is now home to some 29 Islamic banks, both retail and wholesale, with their assets representing just under seven per cent of the total banking system and balance sheet assets of around $16.4 billion (Dh60bn) at the start of 2008, up 34.4 per cent from the beginning of 2007.

It said Bahrain’s Islamic banks had a good year in 2007, with healthy profits for most of the big lenders, including, for example, $144 million in 2007 for Al Baraka Banking Group, up 79 per cent on 2006.

Source: http://www.business24-7.ae

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Written by Suapi Shaffaii

August 17, 2008 at 6:04 am

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