Manama, Bahrain - 19 November 2006 - The Central Bank of Bahrain (CBB) has issued a consultation on a new schedule of licensing fees for financial institutions authorized by the CBB.

The new system, which will be implemented from 2007 onwards, would apply to all types of CBB licensees and would replace the existing system of fixed fees for different license categories previously charged by the now-defunct Bahrain Monetary Agency as well as the Commercial Registration (CR) fees for financial institutions previously charged by the Ministry of Industry and Commerce (MOIC). The bulk of the CR fees were transferred in 2005 to the then BMA, now the CBB, by the Government of Bahrain under a wider reform of MOIC fees.

Going forward, financial institutions would continue to pay the nominal CR fee of BD20 annually to the Ministry of Industry and Commerce, besides the new fee payable to the CBB.

The CBB licensing fee system proposed would apply a single annual charge, set at 1% of a licensee's operating costs, subject to both a floor and a cap, such that the smallest institutions would pay a fixed minimum, and the largest institutions a fixed maximum.  The consultation paper includes a schedule of floors and caps for different license categories.

"In developing a new system of license fees, the CBB has aimed to create a system that is relatively simple to understand and apply, while reflecting to some extent the variable costs of supervising different types and sizes of licensees," said Mr. Ahmed Al Bassam, Director, Licensing & Policy, at the CBB.

"Having said that, the CBB estimates that the amount of fees collected under the proposed new system would, in fact, amount to some 85% of the fees previously collected through the BMA's fixed license fees and the Ministry of Industry and Commerce's old registration fees."

The majority of licensees would actually see their fees stay at or close to their current levels, or else see a reduction.  Even where licensees experience an increase, the fee proposed should remain moderate in relation to the licensee's operating expenses.

The proposed new structure also provides for waiving of licensing fee in exceptional situations as well as the introduction of a non-refundable processing fee, which would amount to 25% of the floor for the license category sought, i.e. BD7,500 for processing an application for a retail bank license.

"In fact, the new license fee structure reduces the overall burden by a significant amount.  The proposed fees are reasonable and in line with those charged in other financial centres, including within the region," said Mr. Al Bassam.

The proposed new structure also rationalises the existing fee system, which was largely inherited from various systems, which pre-dated the creation of the single financial services regulator in 2002, he pointed out. 

Under the existing system, for example, full commercial banks (now re-categorised as retail banks) did not pay a license fee. Similarly, insurance companies paid the Ministry of Industry and Commerce an annual fee, which was in reality the CR fee charged to all companies, with no separate fees charged for their supervision. Capital market brokers, on the other hand, currently pay an annual fee to the Bahrain Stock Exchange (BSE).

The CBB intends to finalise the new proposals, following the consultation, to allow fees due in 2007 to be collected under the new system from April onwards.

"We welcome comments from industry and other interested parties to the rules contained in the consultation paper," said Mr. Al Bassam.

The CBB has an established policy of consulting with industry prior to the issuance of any new rules or amendments to existing rules, he pointed out.

The consultation period runs until 12 December 2006. The consultation paper is available on the CBB website at www.cbb.gov.bh

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Central Bank of Bahrain (CBB)
Contact: External Communications Unit
Tel: +973 17547370/17547360
E-mail: media@cbb.gov.bh
Website: www.cbb.gov.bh

© Press Release 2006