With assets under management (AUM) rising to $10.3 billion at end of first quarter of 2011, the Investment Business Firms sector in Bahrain has shown a robust growth in Q1 compared with the same period last year, according to the statistics of Central Bank of Bahrain.
The Central Bank of Bahrain’s statistics show that the sector comprises of 51 Investment Business Firm licensees from all three sub-categories of the Investment Business license (IB), with reported total assets under management (AUM) of $ 10.3 billion (BD3.9 billion) as of 31 March 2011, an increase of 42.7% over the same time last year.
The CBB said the investments as Principal at the end of Q1 of 2011 reached $324.3 million (BD122.6 million), an increase of 66.8% from the figure of $194.4 million (BD73.5 million) reported for 31 March 2010.
The Investment Business (IB) license was introduced by the Central Bank of Bahrain (CBB) in 2006, as part of a new licensing regime to replace the restrictive Investment Advisory License and to simultaneously cater for firms who wish to offer a larger range of investment products and services, including asset management, yet differentiated from the investment banking license.
The three sub-categories of the IB license allow licensees in each sub-category to undertake certain investment business activities, ranging from investing as principal, managing client assets, and acting as custodians of financial instruments, or offering brokerage and advisory services on financial instruments to clients.
Since the introduction of the investment business regime, the number of IB licenses granted by the CBB grew from an initial figure of 22 licensees, who were automatically migrated from the old Investment Advisory regime, to 51 licenses in July 2011
“The creation of this license has attracted a number of prominent regional and international financial institutions to establish investment business firms in Bahrain,” said Abdul Rahman Al Baker, Executive Director of Financial Institutions Supervision, at the CBB.
“This sector has shown substantial growth since its inception and still is promising for further growth in the coming few years,” he said.
“The global economic crisis had put pressure on the region’s capital markets and investors. However, it is an established fact that any crisis/slowdown is a time phase of a given economic cycle and problems would always bring about opportunities,” Mohammed Ayman Al Tajer, Director of Financial Institutions Supervision Directorate, said, while commenting on the growth trend of this sector.
“One of the effects of the crisis on the investment business sector was the stress put on assets valuations in general, bringing them to a level which would emanate new opportunities waiting to be seized. In times like this stakeholders need to be optimistic about the future and continuously vigilant of the available opportunities,” he added.