The Central Bank of Bahrain (CBB) notes the Bahrain court result in favour of the CBB following the appeal launched by the former Chairman of Awal Bank, against the decision made by the CBB on 30 July 2009 to place Awal Bank into administration.
The ruling supports the CBB’s decision to place Awal Bank into administration due to Awal Bank’s defaults on certain of its obligations in June 2009, under Article 136 of the Central Bank of Bahrain and Financial Institutions Law (Decree No. 64 of 2006).
Since Charles Russell LLP, the Bahrain and London-based law firm, was appointed as external administrator, together with Baker Tilly Restructuring and Recovery LLP, have worked in close coordination with the CBB to instigate a process of asset realization and has initiated legal proceedings across a number of jurisdictions, including Bahrain, London, New York, the Kingdom of Saudi Arabia and the Cayman Islands.
These activities will continue to be driven forward following today’s ruling.
Mr. Khalid Hamad, Executive Director of Banking Supervision for the CBB commented: “The priority of the CBB is clearly to maintain the strength and reputation of the Bahrain banking sector, and given the circumstances we were ultimately left with no other option except to appoint administrators.
“The ruling today clearly validates our decision and we will continue to support the independent administrators. Their priority is the realization of Awal Bank’s assets, for the benefit of all stakeholders and creditors, through all available means.”
Sh. Salman bin Isa al Khalifa, Executive Director of Banking Operations at the CBB commented: “The CBB has worked closely with Bahrain’s financial sector to help it through the inevitable fallout from the global financial crisis. Our aim throughout has been to maintain financial stability in the Kingdom and the decision to place Awal bank into administration should be viewed in this context. Maintaining financial stability, when combined with a supportive business environment, means that the financial services sector in Bahrain continues to enjoy a positive outlook.
He added, “In the last three years, employment in banking and financial services as a whole rose by sixteen percent, now totaling around fourteen thousand employees, a clear illustration of the ongoing progress being made. Importantly, from Bahrain’s perspective, is that around two thirds of the employees in the financial services sector are Bahraini. “
Mr. Rasheed M. Al Maraj, Governor of the CBB, commented: “During its forty years as the financial centre for the MENA region Bahrain has weathered a number of storms yet emerged from each in a stronger position. The reputation that we have built as a well-regulated and transparent financial centre is important to us and we will continue to defend it. This means that, when necessary, we will make the difficult decisions required, such as placing Awal Bank and TIBC into administration. I have no doubt that these decisions were the rights ones to make and in the best interests of Bahrain’s financial sector; they ultimately mean that once again Bahrain’s financial services sector will emerge from the downturn stronger than before.”