Bahrain 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 Islamic finance.
Financial Services in Bahrain
Bahrain 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 Islamic finance. Consistently ranking as
one of the freest economies in the world, Bahrain continues to be of interest to the UK financial
services industry with many UK firms already set up.
Bahrain is one of the UK’s smallest export markets in the Gulf countries and is a major trading
hub and financial centre in the Middle East. Strategically located in the Northern gulf, Bahrain
has good transport links to Saudi and is widely known as the ‘Gateway to the Gulf’ because of its
proximity to the other GCC countries.
Bahrain boasts the most diversified economy in the Gulf, with significant benefits to foreign
companies such as allowing 100% ownership in 95% of private sector activities with no ‘free
zone’ restrictions. In addition, Bahrain has a double tax agreement with the UK. Bahrain’s labour
productivity level is also rated as the highest in the Gulf as it has the most educated and skilled
workforce in the region.
Bahrain also has the longest track record of business in the region with one of the most open and
liberal economies in the Middle East and the world, and is recognised as having strong and
effective regulation in Financial Services & other sectors.
There are opportunities for UK companies in Islamic finance, asset management, insurance,
education and training and capital markets sectors.
As the regional centre for Islamic finance, Bahrain is experiencing unprecedented growth in
Islamic banking, Takaful and Sukuk issuance. Research revealed that the Sharia compliant
industry is worth US$1 trillion globally by 2015 and Bahrain is likely to see a large proportion of
this business given it hosts the largest concentration of Islamic Financial Institutions in the
world. Many conventional banks, recognising the growing importance of Islamic banking, have
successfully integrated Islamic windows within their operations.
Bahrain Islamic Banks are likely to go through a period of consolidation given their desire to
create economies of scale and recent liquidity issues. Joint ventures with UK banks could be a
possible option given Bahrain’s standing as a key regional player due to the combination of its
proximity to Saudi Arabia (the main market), the Central Bank of Bahrain (CBB) and the
presence of a number of self regulatory organisations such as the; Accounting and Auditing
Organisation for Islamic Financial Institutions (AAOIFI), International Islamic Finance Market
(IIFM) and the Islamic International Rating Agency (IIRA).
Bahrain is now a hub for the insurance industry across the Middle East and is home to more than
172 insurance companies, both conventional and Islamic institutions serving both onshore and
Motor insurance is the leading segment with personal/family insurance the main growth market.
There are plans to have compulsory medical insurance which will increase gross premiums to an
estimated BD 190 million by 2015.
The Islamic Insurance market (T’akaful and ReT’akaful) contributions as a percenatge of Total
Premiums written is estimated to increase to 31.2% by 2015; the highest increase in the Gulf
States (source; Swiss Re). Many conventional insurance companies have now added T’akaful
arms (ie Allianz T’akaful Bahrain, Hannover Re T’akaful).
The Bahrain Stock Exchange (BSE) established in 1989 is small in comparison with other GCC
states. However the Bahrain Financial Exchange (BFX), located in the Bahrain Financial
Harbour, launched its Islamic finance activities in February 2011. It is the first multi asset class
exchange in the Middle East region and is internationally accessible to trade cash instruments,
derivatives, structured products and Sharia-compliant financial instruments. Access through the
electronic trading platform and the BFX plug and trade trading floor, located at the Exchange,
will allow market participants to raise capital, manage risk and enable investment in a secure
environment with central counterparty clearing, settlement and depository. The Exchange is also
pioneering financial training at an international level to facilitate market understanding and
Education and Training
Increasingly we are seeing the introduction of apprentice schemes and on-the-job training as 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. 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 first provider of alternative dispute resolutions in the MENA region.
With the USD10 billion ‘Marshal Aid’ from other GCC states to Bahrain, the government will
allocate most of this to developing infrastructure, particularly social housing.
Latest export opportunities in the Financial and Professional Services sector
Latest export opportunities in Bahrain
Getting into the market
Bahrain’s tax-free climate makes Bahrain an attractive place for foreign businesses to enter the
market with 100% foreign ownership allowed. It is an open and liberal economy well-regarded
for ease of doing business.
Information about doing business in Bahrain including its economy, business culture, potential
opportunities and an introduction to other relevant issues can be found in our doing business
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke
market research and support during overseas visits though our chargeable Overseas Market
Introduction Service (OMIS).
To commission research or for general advice about the market, get in touch with our specialists
in country - or contact your local international trade team.
ξ Imane Alalaiwat British Embassy Bahrain. Tel: +973 574129 or email:
ξ Debbie Dixon British Embassy Bahrain. Tel: +973 17574117 or email:
Contact your local international trade team
19th Annual World Islamic Banking Conference
Date: 9 - 11 December 2012
UKTI runs a range of events for exporters, including seminars in the UK, trade missions to
overseas markets and support for attendance at overseas trade shows.
Latest events in Financial and Professional Services sector
More about OMIS and other UKTI services for exporters