CBB Volume 1: Contents
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A measure of the financial strength of a bank or securities firm, usually expressed as a percentage ratio of its capital to its assets.
This includes all components of equity capital including ordinary equity, both voting and non-voting, and preference shares. It also includes convertible or hybrid financial instruments which are debt-like in character and which may be converted into equity. Also for financial institutions and insurance companies, any other financial instruments (such as subordinated debt) which are eligible as regulatory capital should also be included as capital instruments. Sukuk or senior debt instruments would not normally be regarded as "capital instruments" unless they have convertibility features. Equity-like contracts such as joint venture musharaka contracts (investments but not financing) are also included in this definition. The musharaka stake is classified as a capital instrument at onset. Shari'a compliant investment notes would be considered capital instruments if convertibility option/clause is available.Added: January 2011
Capital redemption reserves
Where shares of a company are redeemed or purchased wholly out of the company's profits, or by a fresh issue, the amount by which the company's issued share capital is diminished on cancellation of the shares shall be transferred to this reserve.
Central Counterparty (CCP)
The party that intermediates in the settlement process between counterparties to contracts related to financial instruments, becoming the buyer to every seller, and the seller to every buyer in the market.Added: October 2018
Certificate of commercial registration
A certificate issued by the Ministry of Commerce to businesses for carrying out specified activities as legal entities in the Kingdom of Bahrain.
Certificate of deposits
This is a certificate issued by a bank or thrift that indicates a specified sum of money has been deposited with it for a specified period at a defined rate. A CD shows a maturity date and a specified interest rate, and can be issued in any denomination. The duration can be up to five years.
Certificate of incorporation
A document granted by the Ministry of Commerce giving an entity its legal existence and right to function as an entity.
Certificates representing certain securities
Certificates or other instruments which confer contractual or property rights:(a) in respect of any investment held by someone other than the person on whom the rights are conferred by the certificate or other instrument; and(b) the transfer of which may be effected without requiring the consent of that person.
Combating the financing of terrorism.
Chief Executive, Chief Executive Officer or CEO
Chief executive, chief executive officer or CEO. The board shall determine that person's actual title, which may be 'CEO', 'Chief Executive Officer', 'President', 'Managing Director', or another title.
A clawback requires that an employee (or ex-employee) return to the bank the variable remuneration that was previously paid out to him/her.Amended: July 2014
Added: January 2014
A bank is defined as "closely linked" with:(a) Any person/entity which qualifies as a "controller" of the concerned bank as defined in Module GR-5 of the Rulebook;(b) Any entity which is a subsidiary of the bank;(c) Any entity which is an associate company of the bank.Added: January 2011
Any form of property, security, guarantee or indemnity provided as security for a borrower.
Collective Investment Undertaking
As defined in LR-1.3.34.Amended: January 2011
Raw materials or primary products, usually sold in bulk on an exchange (other than a financial instrument or cash) which are capable of delivery. Gold is therefore a commodity, but a gold ring or a gold future is not.Amended: January 2015
The unit within the Agency responsible for verifying licensees' compliance with the requirements of the BMA Law, the AML Law, this Module and other BMA/CBB Regulations relating to terrorist financing and money laundering, and for collating and monitoring suspicious transaction reports from licensees.
Conflict of interest
A situation when a person or an entity has competing professional or personal obligations to other parties in a financial transaction (e.g. underwriting a securities transaction and simultaneously advising clients whether to buy the security or not) or in ongoing financial relationships (e.g. when a bank has a director of one of its major borrowers on its board), or personal or financial interests that would make it difficult to fulfil his duties fairly.
Connected person(s)(a) The individual's spouse and his/her son, adopted son, stepson, daughter, adopted daughter, step-daughter, father, step-father, mother, step-mother, brother, step-brother, sister or step-sister, under his/her guardianship or control; or(b) A firm or corporation in which the individual or any persons mentioned in (a) has control of not less than 10% of the voting power in the firm or corporation, whether such control is exercised individually or jointly; or(c) Connected persons in relation to a firm or corporation means another firm or corporation in which the first-mentioned firm or corporation has control of not less than 10% of the voting power in that other firm or corporation.Amended: October 2012
Added: January 2011
Means a written statement in both Arabic and English languages which is easily visible and legible and displayed in all credit institutions' premises open to the public, such as websites, newspapers and other press notices.Added: October 2012
A plan maintained to ensure the availability of critical resources and to facilitate the continuity of operations in an emergency situation.
In context of liabilities, those liabilities that do not yet appear on the balance sheet (ie. guarantees, supports, lawsuit settlements). For support or recourse, the trigger may occur at any time in the future, and the loss or expenditure is highly uncertain. Once timing and the quantification of expenditure becomes clearer, provisions should be raised in respect of the contingent liability. When the amount or the timing of the contingent item becomes certain, then it ceases to be a contingent item and should be entered into the balance sheet.
Has the same meaning as when used in IFRS.Amended: January 2015
The control environment means the overall attitude, awareness and actions of directors and management regarding the internal control system and its importance in the entity.
Functions of board members and those persons undertaking executive positions at CBB conventional bank licensees (see LR-1A.1.2).Amended: April 2016
Amended: January 2011
A controllerG is a natural or legal person who either alone, or with his associates:(a) Holds 10% or more of the shares in the licenseeG ("L"), or is able to exercise (or control the exercise) of 10% or more of the voting power in L; or(b) Holds 10% or more of the shares in a parent undertaking ("P") of L, or is able to exercise (or control the exercise) of 10% or more of the voting power in P; or(c) Is able to exercise significant influence over the management of L or P.Amended: October 2013
Amended: July 2012
Amended: January 2011
Conventional bank license
A license issued under Volume 1 of the CBB Rulebook.
Conventional bank licensee
A bank licensed by the BMA/CBB under Volume 1 of the BMA/CBB Rulebook, and generally operating according to conventional finance principals (as opposed to operating in accordance with Islamic finance principles).
Conventional retail banks licensees(s)
Banks which undertake the regulated banking services of (a) to (n) in Paragraph LR-1.3.1 for both residents and non-residents of the Kingdom of Bahrain.Added: July 2017
Conventional wholesale banks licensees(s)
Banks which undertake the regulated banking services of (a) to (n) in Paragraph LR-1.3.1 for both residents and non-residents of the Kingdom of Bahrain, with certain restrictions for residents as defined under Paragraphs LR-1.2.13, LR-1.2.16 and LR-1.2.19.Added: July 2017
Conventional retail bank licensee
Conventional bank licensees which undertake the regulated banking services of in Paragraph LR-1.3.1 for both residents and non-residents of the Kingdom of Bahrain.Amended: December 2018
Conventional wholesale bank licensee
A conventional bank licensee, licensed as a wholesale bank (see Volume 1, Section LR-1.2)
A bank which offers another bank (the respondent bank) an account through which the respondent bank may make payments for its own account and that of its clients. In brief, the correspondent bank acts as agent for the respondent bank. Correspondent relationships do not include transactions between banks as principals (e.g. in the wholesale market).
A counterparty is the other person in a contract. Therefore, if bank A buys a security issued by company B from broker C, bank A has counterparty risk to broker C and Issuer Risk in respect of company B. A counterparty may include any legal person or arrangement, but generally would mean the following:(a) Any individual;(b) Any unincorporated body of persons;(c) Any company which is not a member of a group;(d) Any group of companies; or(e) Any government of a State or any public bodies, local authorities or nationalised industries of a State.Amended: January 2011
The risk of exposure to loss caused by events in a foreign country. The concept is broader than sovereign risk as all forms of lending or investment activity whether to/with individuals, corporates, banks or governments are covered.Added: July 2017
The OTC derivatives instruments for the transfer of credit risk.
Is defined as the potential that a bank's borrower or counterparty will fail to meet its obligations in accordance with agreed terms. Credit risk exists throughout the activities of a bank in the banking book and in the trading book and includes on- and off-balance sheet exposures.Added: January 2015
In relation to clients' assets, this refers to the safeguarding and administering of a client's investments.
A customer is:
Groups or individuals who have a business relationship with the organization — those who receive and use or are directly affected by the products and services of the organization.