Financial & Professional Opportunities

An Expert's View about Banking, Finance and Insurance in Bahrain

Last updated: 21 Aug 2011

Bahrain is a leading international financial centre, with the sector accounting for over 25% of Bahrain’s GDP. The country suffered with the political unrest in February 2011, which led the sovereign rating of Bahrain to be dropped to Baa1, with a negative outlook to the overall rating

Sector briefing Financial & Professional Opportunities in Bahrain Why Bahrain? Bahrain is a leading international financial centre, with the sector accounting for over 25% of Bahrain?s GDP. The country suffered with the political unrest in February 2011, which led the sovereign rating of Bahrain to be dropped to Baa1, with a negative outlook to the overall rating Despite that, the Kingdom is viewed as one of the best regulated financial services centres in the Gulf and has led the Middle East in a range of sectors from banking to asset management to Islamic finance. Eastern HQ here but also moved their global The sector employs a total of 14,137 people of energy HQ from Houston Texas to Bahrain. which 9,313 are Bahraini and as of June 2011 there were 411 licensed financial institutions in Bahrain and a total value of $199.4 billion of ?The sector employs a total assets held by the banking sector. of 14,137 people of which Bahrain is perceived as the most transparent of 9,313 are Bahraini and as of the Gulf States; which together with its policy June 2011 there were 411 on no restrictions on repatriation of capital and licensed financial institutions zero rate corporate tax policy, Bahrain has continued its success in attracting foreign in Bahrain and a total value investments. It was also recently ranked as the of $199.4 billion of assets th 10 freest economy in the world and held by the banking sector.? international professional services firms are establishing regional bases here, such as Ernst & Young who not only have their Middle UK Trade & Investment Sector briefing: Financial & Professional Services opportunities in Bahrain Asset & Wealth Management Opportunities The industry currently holds US$9.63 billion in AUM as of Sep 2010 through more than 2,767 There are opportunities for UK companies in authorised funds of which; 129 are Bahrain Islamic finance, asset management, insurance, domiciled schemes and 2,492 are off-shore, education and training and capital markets and 55 are Islamic funds. In June 2007 the sectors. CBB introduced a new category of ?exempt? schemes into its rulebook to permit hedge Islamic Finance funds and other high risk funds to be As the regional centre for Islamic finance, established in Bahrain. The CBB recognises Bahrain is experiencing unprecendented growth Bahrain?s need to differentiate itself within the in Islamic banking, Takaful and Sukuk Gulf and is continuing to look to encourage issuance. Research revealed that the Sharia Alternative Asset Managers to Bahrain. compliant industry is worth US$1 trillion globally by 2015 and Bahrain is likely to see a Insurance/Reinsurance large proportion of this business given it hosts Bahrain is now a hub for the insurance industry the largest concentration of Islamic Financial across the Middle East and is home to more Institutions in the world. There are currently than 172 insurance companies, both 27 specialist Islamic banks operating in the conventional and Islamic institutions serving Kingdom whilst many conventional banks, both onshore and offshore markets. Bahrain recognising the growing importance of Islamic is home to the Arab Insurance Group (ARIG) banking, have successfully integrated Islamic which is the representative body for the windows within their operations. insurance industry in the Gulf. There is strong growth potential for the Bahrain Islamic Banks are likely to go through Insurance market; gross premiums for Dec a period of consolidation given their desire to 2009 were US$532 million. Motor insurance is create economies of scale and recent liquidity the leading segment with personal/family issues. Joint ventures with UK banks could be insurance the main growth market. Plans to a possible option given Bahrain?s standing as a have compulsory medical insurance will key regional player due to the combination of increase gross premiums to an estimated BD its proximity to Saudi Arabia (the main 190 million by 2015. market), the Central Bank of Bahrain (CBB) and the presence of anumber of Self The Islamic Insurance market (T?akaful and Regulatory Organisations such as the; ReT?akaful) contributions as a percenatge of Accounting and Auditing Organisation for Total Premiums written is estimated to increase Islamic Financial Institutions (AAOIFI), to 31.2% by 2015; the highest increase in the International Islamic Finance Market (IIFM) Gulf States (source; Swiss Re). Many and the Islamic International Rating Agency conventional insurance companies have now (IIRA). added T?akaful arms (ie Allianz T?akaful Bahrain, Hannover Re T?akaful). In addition the Central Bank of Bahrain (CBB) was the first sovereign bank to issue Sukuks in Capital Markets 2001. Primarily introduced as a means of The Bahrain Stock Exchange (BSE) established combating large exposure to liquidity risk faced in 1989 is small in comparison with other GCC by many Islamic banks, Sukuks are looking states. However the Bahrain Financial increasingly appealing to a wide variety of Exchange (BFX), located in the Bahrain investors. The CBB was also the first central Financial Harbour, launched its Islamic finance bank to issue a regulatory framework specific activities in February 2011> It is the first multi to T?akaful and Re-T?akaful Islamic insurance asset class exchange in the Middle East region companies in 2005, making Bahrain the ideal and is internationally accessible to trade cash global location for Islamic Investment. instruments, derivatives, structured products and Sharia-compliant financial instruments. Access through the electronic trading platform and the BFX plug and trade trading floor, UK Trade & Investment Sector briefing: Financial & Professional Services opportunities in Bahrain located at the Exchange, will allow market If you have any questions on the opportunities participants to raise capital, manage risk and above, contact the UKTI] contacts named in enable investment in a secure environment this report. with central counterparty clearing, settlement and depository. The Exchange is also Business opportunities aimed specifically at UK pioneering financial training at an international companies are added daily to UKTI?s website. level to facilitate market understanding and These leads are sourced by our staff overseas development. in British Embassies, High Commissions and Consulates, across all sectors and in over 100 Education and Training markets. As demand grows for expertise, there is an increasing need to boost the supply of qualified You can be alerted to business opportunities on practitioners and professionals to the Kingdom. a regular basis by registering on the UKTI Increasingly we are seeing the introduction of website. Find out more on UKTI?s business apprentice schemes and on-the-job training as opportunities service on the UKTI website well as the more traditional avenues of EQT. The Bahrain Institute of Business and Finance (BIBF) is currently working on a number of initiatives with the UK to improve educational policy in a number of Financial Services roles. The Labour Fund (Tamkeen) are investing US$75m to provide over 11,000 Bahraini nationals with sector-specific skills training over the next four years. Bahrain?s Government has introduced Education reforms that will continue to improve the quality of education and skills in line with the requirements of the private sector, adopting best practice from some of the world?s most successful educational models and creating a regional centre of learning. Legal, & Professional Services As the Middle East?s most liberal and open business environment there are increasing opportunities for Financial Services support industries. This is especially true in relation to the number of firms who have set up in Bahrain to benefit from cross-border work with Saudi Arabia, especially in the lucrative Eastern Province which is closer to Bahrain than Riyadh. The ?Friendship Causeway? to Qatar should open up the Qatari market in a similar manner. As such the ?Big four? professional services firms dominate the advisory services space in Bahrain. Also the Bahrain Centre for Dispute Resolution (BCDR) provides large opportunities for law firms being the firts provider of alternative dispute resolutions in the MENA region. UK Trade & Investment Sector briefing: Financial & Professional Services opportunities in Bahrain Major events and activities UKTI contacts th 18 World Islamic Banking Conference Myrna AlMehaiza Contact: Myrna AlMehaiza Trade & Investment Officer Email: myrna.almehaiza@fco.gov.uk British Embassy Bahrain Time: 21-23 November 2011 Tel: (00973) 17574129 Email: myrna.almehaiza@fco.gov.uk World Islamic Funds Conference www.uktradeinvest.gov.uk Contact: Myrna AlMehaiza Email: myrna.almehaiza@fco.gov.uk Rebecca Topping Time: 26-27 September 2011 Head of UKTI Bahrain British Embassy Bahrain New export events are added daily to the site Tel: (00973) 17574113 and you can register to be alerted to them on a Email: rebecca.topping@fco.gov.uk daily, weekly or monthly basis www.uktradeinvest.gov.uk UKTI?s Tradeshow Access Programme (TAP) provides grant support for eligible Small & Medium Sized Enterprises (SME's) to attend trade shows overseas. Find out more about UKTI support for attendance at overseas events UK Trade & Investment Sector briefing: Financial & Professional Services opportunities in Bahrain Next steps - How UKTI can help British companies wishing to develop their business in the Bahrain market are advised to undertake as much market research and planning as possible in the UK. UKTI?s team in Bahrain, with its wide local knowledge and experience, can provide a range of services to British-based companies wishing to grow their business in global markets. This can include: ? Provision of market information ? Validated lists of agents/distributors ? Key market players or potential customers in the Chinese market ? Establishment of interest of such contacts in working with you ? Arranging appointments ? Organise seminars or other events for you to meet contacts and promote your company in the Chinese market This work is available via our Overseas Market Introduction Service (OMIS) a chargeable service which assists British-based companies wishing to enter or expand their business in overseas markets. To find out more about commissioning this work, or accessing other UKTI services and specialist advice, please visit the UKTI website to find contact details for your local UKTI office. Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2011 by UK Trade & Investment. Crown Copyright © Published 2011 by UK Trade & Investment. ©Crown Copyright 2011 You may reuse this information (not including logos, images and case studies) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit www.nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gsi.gov.uk This publication is also available from our website at www.ukti.gov.uk or for more information please telephone +44 (0)20 7215 8000. UK Trade & Investment Sector briefing: Financial & Professional Services opportunities in Bahrain
Posted: 21 August 2011, last updated 21 August 2011

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