Diversification of Islamic Financial Insturments
171
The table below provides an overview of Bahrain’s Islamic Finance landscape in 2015.
Table 74: 2015 Islamic Finance Fact Sheet for Bahrain
Total Islamic Finance Assets (USD million) 81,069
Number of Islamic Financial Institutions 64
Islamic Banking Assets (USD million) 75,083
Number of Islamic Banks/Windows 36
Takaful/ReTakaful Assets (USD million) 372
Number of Takaful/ReTakaful Operators 9
Other Islamic Financial Institutions Assets (USD million) 795
Number of Other Islamic Financial Institutions 19
Value of Outstanding Sukuk (USD million) 4,803
Islamic Funds Under Management (USD million) 16
Source: ICD-TR Report 2016, p30-31
3.9.2 ISLAMIC BANKING IN BAHRAIN 143
Bahrain is recognized as a pioneer in Islamic banking and finance with an evolution spanning
over 35 years.
As early as 1978, the Organization of the Islamic Conference considered Bahrain a hub of
Islamic banking due to its holistic approach. Bahrain was identified as the natural location to
develop Islamic banking and finance. The Bahrain Monetary Agency (BMA) (now the Central
Bank of Bahrain) played a leading role in the adoption of Islamic banking in Bahrain and
establishing the necessary and enabling supervisory and regulatory framework.
In 1979, the first Islamic bank operating in Bahrain was founded, the Bahrain Islamic Bank
(BIsB). The bank continues operations to date. As of November 2016, there were more than 25
Islamic banks registered in Bahrain, representing the largest concentration of Islamic banks
globally. This comprises seven Islamic retail banks and 19 Islamic wholesale banks144,
(Financial Stability Report, 2017, p.16). Consolidations in recent years have led to some
changes in the equity and ownership of Islamic banks. Mergers have occurred between Islamic
banks and between conventional and Islamic banks. Recent examples include that of Islamic
retail bank Al Salam Bank Bahrain with conventional retail bank BMI Bank in February 2014,
and the consolidation of Elaf Bank, Capinvest and Capital Management House into Ibdar Bank
in December 2013. The resulting institutions benefit from economies of scale, higher capital
and the ability to broaden and deepen their business and product offerings. Notwithstanding
this, many institutions have their Islamic banking business in Bahrain, including Al Baraka
Islamic Bank, Khaleeji Commercial Bank, ABC Islamic Bank, Kuwait Finance House and the
Islamic Bank of Asia145.
143 Anwar Khalifa Al-Sadah, The Development of Islamic Banking in Bahrain, GTNews,
144 Despite increasing diversification attempts, Islamic wholesale banks’ investment portfolios remain highly exposed to
risky real estate sector. Major projects being financed by Islamic banks in Bahrain include Durrat Al Bahrain and Diyar Al
Muharraq, by Kuwait Finance House, and the Financial Harbour, which is financed by Gulf Finance House.
145 Bahrain Economic Development Board (EDB), Islamic finance, accessed 2 May 2017,