The sector, according to the official, comprises of 52 Investment Business Firm licensees from all three sub-categories of the Investment Business license (IB), reported total assets under management (AUM) of $9.93 billion as at 30 June 2011, an increase of 31.6% over the same time last year.
“We are looking for further growth in assets size of this promising sector and very glad to see that in difficult times faced by the global economy, this sector on the overall has shown resistance to be in the profitable zone,” Abdul Rahman Al Baker, Executive Director of Financial Institutions Supervision, at the CBB, said.
The Investment Business Firms sector in Bahrain has shown strong growth during the second quarter of 2011, compared with the same period last year. The number of Investment firm licensees as at 30 June 2011 totalled 52, compared to 50 licensees as at the end of the second quarter of 2010.
“This sector as it develops is certainly filled with untapped opportunities focusing on the MENA region which requires special skills of structuring of financial products in order to meet clients’ needs and expectation,” Mohammed Ayman Al Tajer, Director of Financial Institutions Supervision Directorate, added.
“Investments as Principal totalled $285.6 million, an increase of 5.4% from the figure of $270.9 million reported for 30 June 2010.”
The Investment Business (IB) license was introduced by the Central Bank of Bahrain (CBB) in 2006 to replace the restrictive Investment Advisory License and caters for three different classes of investment firm licensees. A Category 1 license permits the full range of activities such as investing as principal, asset management, acting as custodian of financial instruments, or offering brokerage and advisory services on financial instruments to clients, while Category 2 licensees are permitted to undertake the same with the exception of investing as principal. Meanwhile, a Category 3 license accommodates firms wishing to provide brokerage and advisory services only.
With its wide range of conventional and Islamic financial institutions and markets, including two stock exchanges, listing and trading both conventional and Islamic financial instruments, the Kingdom of Bahrain offers a business-friendly jurisdiction for financial institutions including firms who wish to offer investment products and services, providing clients other alternatives to what is offered by an investment banking license. The financial services industry in Bahrain, comprising a mix of international, regional and local institutions, is also the largest single employer in the Kingdom, making it an attractive and practical business sector.
In addition to the CBB Law, IB licensees are regulated in accordance with CBB Rulebook Volume 4, which is updated on an ongoing quarterly basis to suit the needs of the market while maintaining international regulatory best practice. Major updates include corporate governance issues, management training and competency and regulatory reporting requirements.
Since the introduction of the investment business regime, the number of IB licenses granted by the CBB grew from an initial figure of 22 (licensees who were automatically migrated from the old Investment Advisory regime) to 52 licenses in October 2011.