Banking

Bahrain banking system rated amongst the best

MANAMA : Bahrain 's banking system has been ranked amongst the best in the world, by a global ratings agency. Bahrain has been upgraded to Category B in the Fitch Banking System Indicator (BSI), a special report published semi-annually by international ratings agency, FitchRatings. It defines the BSI as "a measure of intrinsic banking system quality or strength". Countries in the BSI Category B "rank on a par with the typical developed country system", according to FitchRatings.

The new ranking is a vote of confidence in the country's financial sector, the newly-formed Central Bank of Bahrain (CBB) declared yesterday. Bahrain is among a total of 26 countries included in Category B of the BSI, which ranks banking systems on a scale from A (very high quality) to E (very low quality). The current report, issued last week, monitored banking systems in 81 countries.

Of these, seven countries were ranked as Category A; 11 as Category C; 26 as Category D; and 11 as Category E.

"The CBB welcomes the upgrade of Bahrain's banking system to Category B, from Category C," said CBB (CBB) financial stability director Shaikh Salman bin Isa Al Khalifa.

"It is yet another acknowledgement of the strength of Bahrain's banking system and a demonstration of international confidence in the country's macro-economic policies, which have underpinned the continued development of a sound and stable financial system."

Such acknowledgements have enabled Bahrain's continued success as the premier international financial centre in the Middle East region, he pointed out.

The BSI ranking upgrade follows recent issuances of sovereign credit ratings for Bahrain. In April, leading international rating agency Standard & Poor's (S&P) upgraded Bahrain's foreign currency debt rating to 'A', from 'A-', with the outlook as 'stable'. In August, FitchRatings upgraded Bahrain's credit outlook to 'positive', from 'stable', while affirming Bahrain's sovereign long term foreign currency debt rating of 'A-' and the long term local currency debt rating of 'A'. Bahrain's financial system was also commended by the International Monetary Fund (IMF) and World Bank in their Bahrain Financial Sector Assessment Programme (FSAP) report, which described the country's financial system as "robust".

The FSAP review, which is an assessment of the stability of national financial systems, is a key international commendation. The Bahrain FSAP also noted that Bahrain's financial sector is enjoying "strong performance" and is likely to remain a major contributor to overall growth. The expansion of the financial services industry is evidenced by the continued growth in financial sector employment, a key indicator of the overall performance of the sector. Last year, the financial services industry, comprising banking, insurance and the capital market, added 677 new jobs, which represented a nine per cent increase over 2004.

Employment in the industry totalled 8,219 jobs last year. The CBB is committed to the sound and stable growth and development of Bahrain's financial sector, a key segment of the national economy," said Shaikh Salman. About the Central Bank of Bahrain The CBB replaced the Bahrain Monetary Agency (BMA), as of last Thursday. The new entity follows from the enactment of the new Central Bank of Bahrain and Financial Institutions Law (CBB Law), which governs the activities of the Central Bank of Bahrain (CBB). The CBB has assumed all the rights and obligations of the now-defunct BMA.