On Thursday, the Central Bank of Bahrain (CBB) released a statement confirming that all banks in Bahrain are currently operating normally following these latest regional developments. All banks throughout Bahrain will be working at the “highest (security) readiness” because of this updated regional activity. This information was released via a ScanX report outlining (and verifying) that all services are still available and that any active contingency plans have been implemented at each location within their respective banking network. The results illustrate that Bahrain has a robust, interconnected infrastructure capable of both withstanding adverse conditions and continuing to operate as efficiently as possible under normal conditions.
Bahrain’s Financial System: The Bahraini banking industry is extremely stable due to its size relative to what many companies typically experience in other parts of the world. The CBB provides detailed fact sheets on all licensed banking institutions; there are currently more than 80 banks licensed by the CBB, occupying an estimated total of $250 billion in total banking assets. Thus, uninterrupted banking in Bahrain reflects national security and gives regional investors the effect that they still have a stable and reliable source for corporate treasuries to meet their ongoing obligations. In short, the volume of international cash flowing through the banks in Bahrain, combined with the urgent need for each bank to maintain a stable banking environment, means that corporate treasury operations will continue to move forward.
Bahrain`’s banking sector is much more extensive than those in other parts of the Middle East due to geographical proximity and because of the number of financial companies that are based in Bahrain as compared with the other Middle East countries that also offer financial services to their citizens and businesses. There is a huge array of financial services, including retail banks, wholesale banks, Islamic banking institutions, insurance companies, wealth management firms, general asset management firms, and stock exchanges. The dynamic nature of Bahrain`’s banking system allows for great efficiency through multiple access points for both retail and business customers to obtain money. For example, even when limited physical locations exist with secure banking environments, customers can use ATM networks (automated teller machine networks), correspondent banking relationships (agreements between banks to provide services on each other’s behalf), and digital channels to access funds.
The regulators have also reported other practical examples of the strength of Bahrain`’s financial sector through the existence of a continuous and operationally functioning ATM network within the country, normal clearinghouse cycles, and no change in operating schedule for customers. All of these items, when considered together, work to limit “panic runs” that can create financial stress from geopolitical uncertainty. Based on the past experiences with volatility in the Middle East financial sector, those observing Bahrain`’s banking sector have commented that its emphasis on contingency planning (drills, cybersecurity, multilayered security, etc.) reflects lessons learned.
Businesses and their customers should be practical regarding this information — continue with all bank activity as usual while remaining aware of the general security measures (e.g., changing passwords, monitoring for phishing attempts, verifying large outgoing transfers, etc.). From a market perspective, Bahrain’s strategic message is that it can provide a strong, well-regulated financial center for the world and therefore proactively safeguard against risk without causing an interruption to commerce. In effect, the data demonstrates that stability is usually based more on the ability to prepare than on good fortune or luck.
