Brimming with confidence after its successful Formula 1 grand prix in early April, Bahrain is ambitious to project its long-established role as the Gulf’s premier financial and banking hub and capitalise on the booming economies in the region.

Faced with stiff competition from Dubai and its infant Dubai International Financial Centre (DIFC), Bahrain is pushing ahead with its own variant, the Bahrain Financial Harbour (BFH). The BFH’s vision is to “create a revolutionary international financial business park that will empower the global financial community and inspire the economic development of Bahrain”, and construction has already begun.

Gateway to the Gulf

For decades Bahrain has prided itself on being the financial gateway to the Gulf and today the Bahrain Monetary Agency (BMA, the central bank) licenses 362 institutions, of which 186 are banks and banking-related institutions, 163 are insurance and insurance-related firms and 13 are capital market brokers. Ahmed bin Mohamed Al-Khalifa, governor of the BMA, the sole financial regulator, is keen to exploit his new single-regulator model and spread his involvement into the fields of insurance, asset management, capital markets and, of course, banking and Islamic banking.

Bahrain is viewed as being well ahead of its rivals in monetary expertise and in terms of regulation, particularly with its efforts to unify the disparate and interpretative regulations of Islamic banking. With 25 Islamic banks, Bahrain is the largest and possibly the best-regulated Islamic financial centre in the world and, although total Islamic bank assets are relatively small at $4.4bn, BMA deputy governor Khalid Al-Bassam, believes there is huge growth potential. For example, the Bahrain government is keen to issue more Islamic Sukuk leasing bonds and he wants to encourage more private sector Sukuk issues and build an Islamic capital market.