Introduction to Banking and Finance in Bahrain

Bahrain is home to more than 400 licensed financial institutions, representing a rich mix of international, regional and local names. They cover the full range of financial services, with particular concentrations in wholesale banking, insurance and funds/asset management. The financial sector is now the most important sector of the economy accounting for more than 27% of GDP.

The financial sector is also the largest single employer in Bahrain, with Bahrainis representing over 80% of the work-force. The sector is regulated and supervised by the Central Bank of Bahrain (CBB) (www.cbb.gov.bh) , which since 2002 has functioned as the single regulator for the entire financial system. Bahrain's banking system consists of both conventional and Islamic banks and is the largest component of the financial system, accounting for over 85% of total financial assets.

The conventional segment includes 19 retail banks, 69 wholesale banks, 2 specialized banks as well as 36 representative offices of overseas banks. The Islamic segment, offering a host of Shari?a compliant products and services include 6 retail banks and 18 wholesale banks, and the numbers are increasing continuously.

The banking sector has played a pivotal role in the emergence of Bahrain as a leading financial centre in the region. As at December 2006, banking sector assets stood at over US$180 billion, more than twelve times annual Gross Domestic Product. Industry growth has been supported by an open market economy; stable and prudent macro-economic and fiscal policies; a credible regulatory framework in line with international standards; and a notably strong and well qualified local workforce.

All these factors have combined to cement Bahrain's position as a regional banking hub, successfully attracting numerous foreign banking organizations to establish a physical presence in the country.