Bahrain's Banking: Is It A Good Place For Your Money?

Bahrain has become one of the most attractive places for bankers and investors in the Gulf. The country is home to more than 400 licensed financial institutions, including 103 commercial and investment banks. The Central Bank of Bahrain, established in 2006, is responsible for maintaining monetary and financial stability and regulating the financial industry. The country's banking system consists of both conventional and Islamic banks, with the former outnumbering the latter. Bahrain's banking sector has been supported by an open-market economy, stable and prudent macro-economic and fiscal policies, and a credible regulatory framework. The industry has also benefited from a strong and well-qualified local workforce, positioning Bahrain as a regional banking hub.

The Central Bank of Bahrain

The current Central Bank of Bahrain governor is Rasheed Al Maraj. In 2014, he acknowledged the necessity for the Central Bank to cooperate with the insurance market to support the insurance sector, also insisting on the social responsibility of insurance firms. The Central Bank governor is the chairman of the board of directors of the Bahrain Bourse.

Islamic banks in Bahrain

Bahrain's banking system includes both conventional and Islamic banks, with the latter being the largest component of the financial system, accounting for over 85% of total financial assets. As of July 2020, the country's banking sector assets stood at over $212 billion, more than five times Bahrain's annual GDP.

Bahrain is recognised as a global leader in Islamic finance, hosting the largest concentration of Islamic financial institutions in the Middle East. The country is home to several prominent Islamic banks, including:

• Al Baraka Islamic Bank: One of the leading financial institutions in the Islamic banking sector, offering a full range of Shariah-compliant products and services.
• Al Salam Bank: A pioneering Shariah-compliant bank licensed and regulated by the Central Bank of Bahrain, offering innovative financial products and services through its network of branches and ATMs.
• Bahrain Islamic Bank (BisB): Established in 1979 as the first Islamic commercial bank in Bahrain, BisB has maintained its top position in the Islamic banking sector through innovative investment and financing products, coupled with superior retail and corporate banking services.
• Khaleeji Commercial Bank: Known for its leadership in the field of Islamic banking, Khaleeji Commercial Bank offers innovative products and services and is listed on the Bahrain Bourse and Dubai Financial Market.
• Kuwait Finance House-Bahrain: A leading provider of Islamic commercial and investment banking services, specialising in the development and introduction of innovative Shariah-compliant banking and investment products.

The growth of Islamic banking in Bahrain is expected to continue, driven by rising public demand for Islamic financial products and an improved operating environment. This expansion underscores the country's position as a regional banking hub and its attractiveness to foreign banking organisations.

Conventional banks in Bahrain

Bahrain has become an attractive place for bankers and investors in the Gulf. As per the Central Bank of Bahrain, there are 103 commercial and investment banks in the country, 79 of which are conventional banks.

Ahli United Bank

Considered one of the most noteworthy banks in Bahrain, Ahli United Bank was established on May 31, 2000, following the merger of The United Bank of Kuwait (UBK) and Al-Ahli Commercial Bank B.S.C. In 2020, the bank owned $40.1 billion worth of total assets, and its net profit in the second quarter of 2021 was 13.9% higher than in the same quarter of the previous year.

Arab Banking Corporation

Arab Banking Corporation, established in 1980, is one of the largest banks in Bahrain, offering trade finance, project finance, structured finance, and corporate and institutional banking services. The bank has clients across five continents, including the Middle East, North Africa, Europe, the US, and Asia. As per the last data at the end of 2021, the total assets owned by this bank were $30.9 billion.

Gulf International Bank

Gulf International Bank (GIB) was founded in 1975 in Bahrain and began its operations in 1976. GIB has over 1100 employees worldwide and specializes in asset management, investment banking, treasury, and wholesale banking. As of the third quarter of 2021, the consolidated total assets owned by GIB were $35.8 billion, and the consolidated net income after tax was $40.9 million.

Bank of Bahrain and Kuwait

The Bank of Bahrain and Kuwait has been serving customers for over 35 years, offering products such as loans and portfolio management and supporting businesses of all sizes in multi-million-dollar projects. Established in 1971, the bank had total assets of $10.252 billion as of 2019 and a revenue of $419.894 million that year.

National Bank of Bahrain

The National Bank of Bahrain, founded in 1957, has been providing banking, financial, and investment services for over 60 years. As of 2017, the bank's total assets were $824.9 billion, and its net income was $162.25 million. The bank has 761 employees and is headquartered in Manama.

Bahrain Development Bank

Founded on December 11, 1991, Bahrain Development Bank focuses on serving the needs of small and medium-sized enterprises. As of 2015, the bank had total assets of $514 million and a net income of $2.74 million, with 203 employees. Like the National Bank of Bahrain, it is also headquartered in Manama.

The Bahrain Bourse (BHB)

The BHB operates from Sunday to Thursday and is monitored by an independent Board of Directors, chaired by the Governor of the Central Bank of Bahrain. Three indices track the Bahrain Bourse: the Bahrain All Share Index, the Dow Jones Bahrain Index, and the Estirad Index. As of 2017, 42 companies were listed on the exchange.

The Bahrain Bourse has a range of regulations and procedures in place to govern its operations. These include internal regulations, listing and market regulations, trading rules and procedures, clearing, settlement, and central depository rules, and brokers and custodians resolutions.

In terms of trading and settlement regulations, securities listed on the BSE must generally be traded on the floor through registered brokers who are subject to specific standards and terms. Settlements and transfers of ownership of domestic joint-stock securities are handled through the BSE, creating binding contracts for both sellers and purchasers.

The Bahrain Bourse also has a focus on sustainability and environmental, social, and governance (ESG) issues. It launched a voluntary ESG reporting guideline for listed companies and stakeholders in 2020, which was updated in 2022. The Bourse also provides ad-hoc ESG-related training, such as workshops on sustainability and Climate-related Financial Disclosures.

The Bahrain Association of Banks (BAB)

BAB also champions national responsibility initiatives, such as the "Banking for a Greener Bahrain" strategy, which includes backing a tree-planting initiative near the Financial Harbour. Furthermore, BAB organises roundtables to advance law implementation with enhanced information systems, working with entities like the Judicial & Legal Studies Institute.

In October 2024, BAB elected a new Board of Directors for the 2024-26 term, presided over by Adnan Yousif, the current Chairman. The new board members include Yaser Alsharifi (Chairman), Ahmed Alkharji (Deputy Chairman), and Dalal Al Qais (Treasurer). Alsharifi expressed appreciation for the confidence shown by the Board and emphasised BAB's commitment to its strategic goals, which include strengthening the banking sector, streamlining operations, and adapting to industry developments.

BAB, through its diverse programmes and initiatives, aims to maximise value for its member banks and financial institutions, solidifying its role as the key representative for Bahrain's financial industry.

Frequently asked questions