Bahrain to tighten bank regulations

The Central Bank of Bahrain (CBB) plans a sweeping overhaul of liquidity rules, designed to make banks more robust after troubles at two Saudi-linked banks cast doubt on the country's regulatory system.

The proposed changes will force banks to increase the amount of liquid assets held, to submit to rigid checks and limit the so-called mismatches that could starve a bank of funding in stressful markets, according to documents on the CBB website.

The CBB in July assumed control of Saad Group's Awal Bank and The International Banking Corporation (TIBC), a unit of Ahmad Hamad Algosaibi and Brothers, citing a substantial shortfall in their assets compared with their liabilities.