Bahrain clarifies Basel III rules, eyes 2015 rollout

May 29, 2014 - 2:00:44 am

DUBAI: Bahrain has become the first country in the Gulf outside Saudi Arabia to clarify its treatment of capital-boosting instruments under Basel III rules, saying the instruments must include loss absorption features.

Its decision, which is in line with Saudi Arabia, a member of the committee which drafted Basel III, could influence regulators in other Gulf states that have not yet clarified their stance, such as the United Arab Emirates and Qatar.

Banks across the Gulf have been waiting for regulatory guidance on how subordinated debt instruments will be treated under Basel III, a set of stricter banking rules which are being phased in around the world over the next several years.

It is up to each national regulator to decide how to interpret the rules; Bahrain’s central bank has drafted separate rule books for conventional and Islamic banks, proposing they both come into effect in January 2015.