Bahrain. Country Profile

Transcription

1 Bahrain Country Profile

2 Contents Country Overview 1 Clearing Systems 4 Foreign Exchange Controls 5 Taxation 6 Investment Opportunities 7 Trade Regulations 9 Citi Solutions and Services 10

3 Country Overview Banking Holidays in Bahrain Bank Holiday Mouloud Al Nabi Eid Al Fitr Eid Al Adha Al-Hijrah Ashoura National Day January 23 January 07 August 14 October 4 November 12 November December The Kingdom of Bahrain is a Constitutional monarchy, headed by the King, and one of the most diversified economies in the Persian Gulf. Highly developed communication and transport facilities make Bahrain home to numerous multinational firms with business in the Gulf. As part of its diversification plans, Bahrain implemented a Free Trade Agreement (FTA) with the US in August 2006, the first FTA between the US and a Gulf state. Bahrain s economy, however, continues to depend heavily on oil. Petroleum production and refining account for more than 60% of Bahrain s export receipts, 70% of government revenues, and 11% of GDP (exclusive of allied industries). Other major economic activities are tourism, the production of aluminium Bahrain s second biggest export after oil finance, and construction. Bahrain competes with Malaysia as a worldwide centre for Islamic banking and continues to seek new natural gas supplies as feedstock to support its expanding petrochemical and aluminium industries. Bahrain has a diverse and largely well educated workforce and the banking and finance sector in particular is well represented in Bahrain. Key Facts Capital City Manama Population 1,248,348 (July 2012 est.) Currency Bahraini dinars Currency SWIFT Code BHD Exchange Rate (2011 est.) GDP $27,700 (2011 est.) GDP Growth Rate 2.1% (2011 est.) Exports $19.91 billion (2011 est.) Imports $12.11 billion (2011 est.) Inflation Rate -0.4% (2011 est.) Source: Banking System Banks in Bahrain No. of institutions 134 (January 2011) Retail banks 30 Locally incorporated 15 Branches of foreign banks 15 Wholesale banks 77 Representative Offices 27 Islamic Banks (included in above): No. of banks 27 (January 2011) Bahrain Country Profile 1

4 Country Overview General Overview of Bahrain s Banking System Bahrain s banking system consists of both conventional and Islamic banks and is the largest component of the financial system, accounting for over 85% of total financial assets. The conventional segment includes 19 retail banks, 69 wholesale banks, 2 specialized banks as well as 36 representative offices of overseas banks. The Islamic segment, offering a host of Sharia compliant products and services include 6 retail banks and 18 wholesale banks. The banking sector has played a pivotal role in the emergence of Bahrain as a leading financial centre in the region. As at March 2011, banking sector assets stood at over USD 200 billion Industry growth has been supported by an open market economy; stable and prudent macro-economic and fiscal policies; a credible regulatory framework in line with international standards; and a notably strong and well qualified local workforce. All these factors have combined to cement Bahrain s position as a regional banking hub, successfully attracting numerous foreign banking organizations to establish a physical presence in the country. Recent growth in the sector has been backed by the good fortunes of the oil industry and the corresponding increases in liquidity. Banks are thus playing a central role in reinvesting surplus oil earnings as well as serving financing opportunities in other segments of the economy. Location of Financial Investment Centres Manama: Diplomatic Area and Seef District Citi in Bahrain Citi N.A. was one of the first US banks established in the Middle East with local presence in Bahrain since Citi has become the largest financial service provider in the marketplace with both onshore and offshore vehicles. Citi s market penetration and scale of operations are extensive. Citi in Bahrain s core businesses operations include: Citi Cash, Trade and Treasury Services, Corporate Banking, Financial Institutions, Treasury, Citi Islamic Investment Bank, NRI and Global Consumer Banking. Citi in Bahrain is unique in its extensive market coverage with Relationship Management teams dedicated to serve our client base in the Non-Presence countries such as Saudi Arabia and Oman. Head Office Address Citibank N.A. 1133, Road 2819 Al Seef District 428 P.O. Box 548 Kingdom of Bahrain Tel: Fax: Location of Branches Citi N.A. 1133, Road 2819 Al Seef District 428 P.O. Box 548 Kingdom of Bahrain Tel: Fax: Bahrain Country Profile

5 Country Overview Services Offered to Citi Clients Treasury Cash Management Liquidity Management Investments Loans Trade Services Buyer & Supplier Financing Agency and Trust Fund Services Global Custody and Clearing Securities Lending Corporate Finance Bahrain Country Profile 3

6 Clearing Systems The clearing system in Bahrain is national. It covers cheques and funds transfers. All cheques are MICR cheques. There are two types of clearing: ordinary and special. All cheques over BHD (approx. USD 26,000) may be cleared through special clearing, with same day value. Citi is a full member of the local clearing system. The Central Bank of Bahrain (CBB) offers an Automated Cheque Clearing System (ACS), which was implemented in It is a Deferred Net Settlement (DNS) System. The ACS is based on the Magnetic Ink Character Recognition (MICR) coding scheme and processes inter-bank cheques through pre-programmed cheque sorting machines. The system has contributed to making the cheque clearing process more efficient. The CBB will soon be moving to an image-based Cheque Truncation System (CTS). Under the image-based Cheque Truncation System, the cheque images and the associated MICR particulars and not the physical instruments, are submitted to the receiving bank through the CBB. The Cheque Truncation System provides earlier completion of the cheque clearing cycle with faster realisation of funds. The cheque images are used for debiting the drawer s accounts. Clearing Streams Clearing Stream (CS) Payment Type Payment Instruments Central Bank of Bahrain Low Value Paper Cheques Central Bank of Bahrain Electronic Transfer Domestic Funds Transfer Funds Availability Schedule Clearing System Cut-off time (Local Time) Funding Date Client DR Date Client Value Date Local Currency Electronic Transfers 10:30 AM D D D Local Currency Other banks 10:30 AM D D D Local Currency Book-to-book 1:30 PM D D D Foreign Currency Transfers 1:30 PM D D D+1 Cheque Deposit 1:00 PM D D D 4 Bahrain Country Profile

7 Foreign Exchange Controls Bahrain has a free regime of capital circulation, and there are no foreign-exchange controls. Residents and non-residents may hold foreign currency and local currency accounts in Bahrain as well as abroad and are free to make direct and indirect investments in any currency. There are no legal restrictions on the repatriation of funds Bahrain Country Profile 5

8 Taxation Income Tax Zero. Withholding Tax Zero. Other Taxes Zero. 6 Bahrain Country Profile

9 Investment Opportunities The following investment vehicles are available to residents and non residents: Time Deposits A savings account or Certificate of Deposit held for a fixed term with the understanding that the depositor can only withdraw by giving written notice. The term generally is at least 30 days. Time deposits are offered for local currency and foreign currency in Bahrain. Foreign currency time deposits are available in USD, GBP, and EUR. Islamic Investment options: Shariah compliant Mutual funds Capital Protected Shariah compliant structure notes Sukuk Stock Market Bahrain Bourse (BHB) was established as a shareholding company according to Law No. 60 for the year 2010 to replace the Bahrain Stock Exchange (BSE) that was established in The emergence of the capital markets sector in the Kingdom of Bahrain dates back to 1921 following the establishment of the first branch of a commercial bank (Standard Chartered Bank). In 1957, the first Bahraini Public Shareholding Company was established. Since then, more local public shareholding companies began to operate, reaching their peak in the beginning of the 1980 s. The decision to establish an official stock market in Bahrain came through Amiri Decree No. 4 which was issued to establish the Bahrain Stock Exchange (BSE) in The Exchange officially commenced operations in June 1989 with 29 Bahraini shareholding companies listed. In 1999, (BHB) implemented the Automated Trading System (ATS) to carry out all the exchange s transactions electronically instead of manual trading. In 2002, the regulatory authority and supervision of (BHB) was transferred from the Ministry of Commerce to the Central Bank of Bahrain (CBB) in which CBB regulates and supervises all the bourse s activities. The Bahrain Stock Exchange (BSE) is the focus of capital market activities in Bahrain. The exchange has grown in the number of listed securities with 50 equities, 19 bonds (both conventional and Islamic) and 35 mutual funds currently listed. As at end December 2010, market capitalization stood at USD 20.1 billion. Trading is carried out through 11 securities brokers active in the market and day-to-day trading takes place through the Automated Trading System (ATS). There is also a Clearing, Settlement and Central Depository System (CDS), which is likewise automated. These two systems have combined to ensure a fast and efficient trading process, ensuring delivery versus payment on a T+2 basis. The Bahrain Bourse is under the regulatory and supervisory oversight of the Central Bank s Capital Market Supervision Directorate, which oversees both the primary and secondary markets. Bahrain Country Profile 7

10 Investment Opportunities Contact Details: Address: 4th Floor, Bahrain Financial Harbour, Financial Mall P.O. Box 3203 Manama, Bahrain Tel: Fax: Website: 8 Bahrain Country Profile

11 Trade Regulations Bahrain is part of the Gulf Cooperation Council, or GCC which is in effect a trade agreement between Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, established in A Gulf Cooperation Council common market was established in January 2008, suggesting a common market to ensure the removal of market barriers and national treatment between the member states. After the common market agreement became an Act, all Gulf Cooperation Council members became signatories of the Greater Arab Free Trade Area (GAFTA). The GCC is considered to be one of the few growing economies in today s world. This is a result of an economic boom in sectors such as oil and natural gas, and property. The GCC s annual GDP is estimated around USD 1 trillion, which is hugely dependant on the oil & gas business predominantly in Saudi Arabia and Qatar. All importers and exporters are required to be listed in the commercial registry maintained by the Ministry of Industry and Commerce (MIC), and to be members of the Bahrain Chamber of Commerce and Industry (BCCI). There is a 5% import duty on food products imported from countries external to the GCC. Import licenses for goods sold in Bahrain are allocated only to locally established businesses, which need at least 51% Bahraini ownership. Bahrain complies with the standard international export controls. Product specific documentation is also required for imports of drugs and medicines, food products, live animals, birds and fish, and all meat and poultry products. Import permits must accompany certain products, including special breed animals, armaments, insecticides, and fungicides. Drugs and medicines may only be imported by a drug store or pharmacy licensed by the Ministry of Health. Bahrain Country Profile 9

12 Citi Solutions and Services Account Services There are no restrictions on non-residents holding accounts in Bahrain. Resident Current Accounts No restrictions. Resident Savings Accounts There is no real distinction between savings and current accounts. Non-resident Accounts Permitted in both local currency and foreign currency. Foreign Currency Accounts No Restrictions. Currency Convertibility Foreign banks may participate in the FX market if they are authorized and licensed by the Central Bank of Bahrain. All securities transactions are executed on a Spot FX basis and forward FX contracts are possible up to one year. FX transactions do not have to be linked to securities transactions. Interest & Overdrafts Interest can be paid on both local and foreign currency accounts. Overdrafts are allowed for all resident and non-resident local currency accounts. Remittance of Dividends and Profits No restrictions. Repatriation of Capital No restrictions. 10 Bahrain Country Profile

13 Citi Solutions and Services Payments Our payment solutions are designed for both local and overseas payments. Clients use CitiDirect Online Banking and Citi Connect for Files for payments and can select any combination of services needed to meet both domestic and international payment needs. PayLink Cheques Citi offers LCY (Bahraini Dinar) Manager s Cheques that can be initiated via our internet-based electronic banking platform CitiDirect Payroll Payroll can be handled automatically through CitiDirect. Staff accounts held with Citi would be credited with same day value if instructions are received before 12 noon. Staff accounts held with other local banks will be handled as in local clearing for BHD. Funds Transfer Real-time local currency high value payments with same day settlements. Cash Citi branches offer cash withdrawal services in LCY and USD. In addition, Cheque Encashment and over the counter services are available in our branches. WorldLink Payment Services A complete solution that enables clients to issue cross-border electronic and cheque payments in more than 135 currencies, without the need to maintain foreign currency accounts. Global Clearing Foreign currency accounts domiciled offshore at Citi branches providing high value and cheque payment solutions. Cross-border Funds Transfer Real-time foreign currency high value payments. WorldLink Foreign Cheque Collections Processing of foreign cheques through the clearing system of cheque origination. Bahrain Country Profile 11

14 Citi Solutions and Services Receivables Citi provides clients with a wide range of receivables products, leveraging outsourced relationships where it does not have sufficient operational scale. Examples include Merchant Services and low value clearing instruments, such as cash and cheques. Should cash and cheque pick-ups be required, Citi Bahrain can arrange for armoured vehicle cash pick-ups in and around Bahrain. Citi branches in Bahrain also offer cash deposit services in LCY as well as USD. Cheques - Citi s clients can use the branch network for cheque deposits. Should cheque pick-ups be required, Citi Bahrain offers cheque pick-ups in and around Bahrain. Incoming Funds Transfers Clients can open accounts in LCY (Bahraini dinars) and FCY (US Dollar, Euro, GBP, SAR, OMR) at Citi Bahrain for receipt of funds transfers to these accounts via the clearing system managed by the Central Bank of Bahrain. Incoming Foreign Funds Transfers Local accounts can be credited through the transfer of funds from abroad. The FX market is currently free of restrictions on the purchase or transfer of foreign currency. 12 Bahrain Country Profile

15 Citi Solutions and Services Liquidity Management Citi provides the following liquidity management solutions for clients to help maximize return on cash balances within local and foreign currency cash management operating accounts. Term Deposits BHD and FCY (USD/GBP/EUR) Term deposits are offered locally with interest paid at maturity. Citibank Online Investments A web-based portal offers time deposit investments across 18 currencies and can be linked to accounts in 22 countries. In addition, it provides investment opportunities in spectrum of more than 90 institutional funds, including U.S. dollar denominated domestic (US. registered), offshore (non-us. registered), tax exempt, tax efficient, government/ Treasury and non-dollar currency funds. Citibank Online Investments is available via single sign-on through both the CitiDirect Online Banking and TreasuryVision treasury management platforms. TreasuryVision TreasuryVision turns comprehensive forecast data into useful information. View forecasts at a global, regional or local level; by geography, business unit or legal entity; on a daily, weekly or monthly basis. CFF is a powerful and flexible tool providing users the ability to create a holistic forecast including data from banks, internal forecast and systems (e.g., ERP, TMS). Using customisable forecast templates, users can create short-, medium- and long-term forecasts and perform actual versus forecast comparisons. Cash forecasting analytics enable users to analyse all of their legal entity cash forecasts in a single, aggregated view across a variety of available parameters. Bahrain Country Profile 13

16 Citi Solutions and Services Trade Services Citi s suite of supply chain solutions mitigate risk and enable our clients to have access to the short-term capital they need to make their business function. Our pioneering work in Export and Agency Finance (EAF), for example, has filled a critical gap in credit during the recent slowdown illustrating our ability to ensure credit flows even in today s times. Our working capital solution sets cover both the internal Trade Finance and outside EAF finance options for firms and are available to both corporate and Financial Institutions. These solutions are complemented by a range of Trade Services. All of these solutions are grounded in our core strengths: global coverage, expert customisation, client-responsive innovation, and unsurpassed execution. Citi offers a range of services from traditional letters of credit to our Open Account Trade Processing developing risk and working capital solutions that help corporations conduct, monitor, and control international commercial transactions as well as mitigate their associated risks: from issuing and paying letters of credit to handling settlement and administration of documentary collections. Other Trade Services include: Import Letter of Credit (L/C) Export Letter of Credit (Advising, Negotiation and Confirmation) Enhanced Open Account Importers and Exporters who regularly conduct business with each other can reduce the time and costs associated with letters of credit and documentary collections by taking advantage of Citi s efficient, electronic, data-enriched open account trade process. Citi not only effects payment for open account purchases, but also transforms and streamlines the entire reconcilement process between trading partners located virtually anywhere in the world. With Citi s Enhanced Open Account Trade Processing, clients benefit from our team s knowledge of local trade practices, regulations, market risks, and understanding of trade documents. Since we process a very high volume of trade transactions daily, we handle very cost effectively the straight-through processing of trade transactions. Trade Advisor Trade Advisor is a free online inquiry tool available as part of the functionality of CitiDirect Online Banking, providing all parties to trade transactions with information on the status of their transactions. Similar to courier delivery tracking applications, Trade Advisor lets our clients and their business partners and suppliers access summary information online using a transaction reference number. Trade Finance Guarantees (Performance and Financial) Risk Participation Documentary and Direct Collections Trade Outsourcing for Financial Institutions Channel-finance Export Collection Direct collections only. 14 Bahrain Country Profile

17 Export Letters of Credit Export Letters of Credit Advising, Export Letters of Credit Confirmation, Commitment to Negotiate, LC Transfer. Import Collection Import Collection only. Export and Agency Finance (EAF) Long-term capital for CAPEX investments and financing cross-border trade flows. Ekes and Partnering for Growth Ekes are government agencies that promote employment and growth in their home countries by encouraging exports of goods and services. They guarantee bank finance and supplier finance, and/or provide direct loans, transforming usually non-investment-grade borrowers to AAA/AA assets, allowing commercial lenders to extend financing for longer tenors and larger amounts than would otherwise be possible. Tied Financing Citi offers Tied financing directly linked to procurement of goods. This is an excellent option when goods are primarily sourced from one or two countries. Clients benefit from competitive pricing, longer tenors, diversified funding sources and visibility to future investors. Some Ekes also have programs to support the issuance and confirmation of Letters of Credit and risk converge for Guarantees. Untied Financing Citi can also provide finance that is generally linked to a new investment. This option is best used when goods are sourced from a multitude of countries. Benefits include pricing, which is generally at market terms, longer tenors (over 10 years in many cases) and can often be available in local currency. Citi Procure-to-Pay Procure-to-Pay is a new end-to-end financial supply chain automation solution in partnership with ARIBAs. This holistic proposition brings together the electronic invoicing and discount management engine of ARIBAs with Citi s core payments, trade finance, and commercial cards solutions, delivering increased operating efficiency and integrated supply chain management to our clients. Moreover, Procure-to-Pay is integrated with our Supplier Finance program described above, allowing suppliers to easily access this attractive source of liquidity. Bahrain Country Profile 15

18 Citi Solutions and Services Securities and Funds Services (SFS) Citi Bahrain offers sophisticated and diverse Securities and Fund Services. This consists of a number of products that serve investor, intermediary and issuer clients. These products are global custody, fund services, securities finance, direct custody and clearing, agency and trust and depositary receipts. Each of these products provides market leading, capital-intensive solutions that enable our clients to focus on their core competencies. Today, our full range of securities and fund services are available to financial institutions across the region we can even connect you to Citi s wider investment bank. With Citi you are supported by our locally based professionals and product experts who can draw on the strength and scale of a worldwide branch network, spanning more than 100 countries, as well as an integrated technology platform that delivers consistent and superior service standards wherever we operate. Whether you are looking to invest in the region, create or develop a local operation or initiate outward or intraregional investments, we have the skills, experience and geographic reach to support any business requirement. Global Custody We enable investors to manage securities portfolios, financial positions and investments through a single access point, in over 90 markets. Global custody offers the institutional investors a single access point to the world s securities markets, providing securities safekeeping, settlements, administration and consolidated reporting for their global portfolios. Global custody insulates clients from market inefficiencies and is particularly suited to institutions without their own network management function. Through our Internet-based delivery channels you can access Citi s full range of global custody and analytic services, industry-leading proprietary office network, global technology platforms and consistent operating systems. This connectivity means you always have the timely and accurate information you need to make important business decisions. Securities Finance Our leading securities lending services includes agency and principal programmes, in either a custody or on-custody capacity as well as prime brokerage and financing solutions. Through our on-the-ground knowledge in over 70 markets, our coordinated global approach and our securities lending desks across the world, we fulfil the borrowing requirements of over 100 top institutional investors and financial institutions worldwide, 24 hours a day. 16 Bahrain Country Profile

19 Citi Solutions and Services Fund Services With Citi s Fund Accounting and Administration services, you can outsource your fund s back-office functions to a knowledgeable expert, allowing you to focus on asset management and product distribution. Citi understands your needs as a driven portfolio manager, to continually look for ways to reduce costs, grow your Assets under Management and improve your fund s performance. We are constantly innovating to develop integrated, flexible and end-to- end processing, so you can concentrate on the performance of the fund. In 2008, we extended the number of fund domiciles we service worldwide to 20 with the addition of Bahrain. Further expansion in the region is anticipated. Our flexible approach and global service model allows Citi s administration centres from around the world to deliver local transaction support. Key services include front-, middle- and back-office services providing: Compliance monitoring Corporate secretarial and tax accounting Custody and banking Daily Net Asset Valuation (NAV) calculations Fiduciary Fund accounting Investment accounting Performance measurement and attribution analysis Risk reporting Sharia compliant fund support Transfer agency Direct Custody As one of the leading securities processors, we operate one of the world s largest direct custody and clearing networks spanning over 60 markets. The continued expansion of this network means our clients have the local market expertise and global market access they need to sieze new opportunities. Our offering in Bahrain as a direct market provides securities services to institutional investors that prefer to have direct access to a local custodian in the various markets in which they invest. Moreover, our experienced, on-the-ground local team has extensive market and regulatory knowledge. Agency and Trust Citi is a leading provider of multiple agency, fiduciary and depositary services covering a variety of capital market transactions including structured finance, medium term note and commercial paper programmes, M&A, escrow, project finance and loan administration. With professionals working in financial centres around the world such as New York City, London, Dublin, Frankfurt, Milan, Moscow, Dubai, Mumbai, Shanghai, Singapore and Hong Kong. Citi provides onshore agency and cross-border agency and trust services to issuers in the Middle East and globally. We operate as a local security agent and account bank under local law in Bahrain and other GCC countries, and provide full support for international transactions. Bahrain Country Profile 17

20 Citi Solutions and Services Depositary Receipts Citi has been helping locally listed banks and corporates gain cross-border listings and access international capital markets by way of Global or American Depositary Receipts (GDRs/ADRs) over many years. We are among the leading GDR/ ADR banks, with the ability to mobilise one of the largest equity distribution and investor relations support networks in the world both key tools in ensuring liquid and successful GDR/ADR programmes. This unique offering enables issuers to raise capital and/ or broaden their shareholder base. As a depositary, Citi issues and cancels depositary receipts in response to receiving or releasing the underlying shares and provides a full range of shareholder services, including registration and servicing of the depositary receipts, and custody and asset servicing of the underlying securities. Delivery Systems SWIFT Citi Bahrain is fully equipped with SWIFT capabilities. Local Address: CITIBHBX Citi Bahrain is able to receive MT100, MT200, MT300, MT400, MT500, MT700, MT900 series messages and to issue send MT102, MT202, MT940. CitiDirect Online Banking CitiDirect Online Banking is the primary platform utilized by clients to manage both local and global cash management products and services, providing a direct window into Citi s global platform for cross-border payments. 18 Bahrain Country Profile

21 Notes Bahrain Country Profile 19

22 Citi Transaction Services Citibank, N.A. All rights reserved. Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world. The information contained in these pages is not intended as legal or tax advice and we advise our readers to contact their own advisors. Not all products and services are available in all geographic areas. Any unauthorised use, duplication or disclosure is prohibited by law and may result in prosecution. Citibank, N.A. is incorporated with limited liability under the National Bank Act of the U.S.A. and has its head office at 399 Park Avenue, New York, NY 10043, U.S.A. Citibank, N.A. London branch is registered in the UK at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, under No. BR001018, and is authorised and regulated by the Financial Services Authority. VAT No. GB Ultimately owned by Citi Inc., New York, U.S.A.