Growing demand for more sophisticated financial products and services helped drive growth in Bahrain's financial sector during last year, according to the Economic Development Board (EDB) and Central Bank of Bahrain (CBB).

Bahrain attracted a number of businesses, with the number of registered financial services firms swelling to 415 by the end of the year, making it one of the largest financial centres in the region, reported the Gulf Daily News, our sister publication.

Among the businesses that established in Bahrain in 2013 were Cigna, a global health insurance and health services provider which launched its regional third party administration company employing 50 people in Bahrain, Julius Baer, the leading Swiss private banking business, and Takaud, the first specialist savings and pensions provider in the Mena region.

"The six economies of the GCC are worth a combined $1.5 trillion and with ongoing investment in infrastructure and an expanding population, demand for financial services is growing," said Transportation Minister and EDB acting chief executive Kamal Ahmed.

"Bahrain offers a highly-skilled bilingual workforce, a tried and tested regulatory framework, low operating costs and excellent connectivity across the region, with particularly strong access to the region's largest economy, Saudi Arabia.

"This makes Bahrain an ideal location for financial firms that want to establish a sizeable long-term presence in the GCC and take advantage of these trends.

"We have seen a number of these firms establishing offices in Bahrain in 2013 and we are confident that this will carry on into 2014 as demand grows and we continue to implement reforms that will enhance our role as a regional financial hub,” he added.

Alongside strong growth last year, the kingdom also developed a number of reforms to ensure that the regulatory framework continues to meet the sector's needs and encourage long-term growth.

The CBB has brought in new directives on banking remunerations and fees, updated directives on banks' internal audit function in line with new Basel requirements and issued new rules that meant that all applications that are prepared in accordance with the Unified Standards issued by the GCC by Gulf issuers will be accepted in Bahrain, easing the integration of GCC securities markets.

The CBB also recently implemented new rules set to boost the takaful sector by addressing some issues around solvency, which have had the potential to hold back the rapidly expanding industry.

The takaful industry in Bahrain has experienced a remarkable growth in the last ten years - the industry grew by almost 22 per cent in 2012 - and by continuing to evolve the takaful model, the kingdom will remain a leading jurisdiction for the sector.

CBB Governor Rasheed Al Maraj said high quality regulatory standards lie at the heart of a successful financial sector and this is why Bahrain is determined to work at adapting and maintaining our framework in line with international standards.

"The Islamic finance sector is also particularly important to Bahrain, so the CBB's leadership in the development of Islamic finance will be maintained and enhanced through developing new initiatives and maintain an ongoing dialogue within the industry."

Education and human capital initiatives were also a major focus last year, and the CBB worked closely with a range of organisations including the Bahrain-based Waqf Fund and the Bahrain Institute of Banking and Finance (BIBF).

The Waqf Fund put in place its plan for a leadership training initiative being launched this year, to help develop the next generation of leaders in the Islamic Finance sector, whilst BIBF's Centre for Islamic Finance continued to expand its international footprint, and in July last year arranged a training event for 29 participants from 16 different countries.

Two independent reports from KPMG and Thomson Reuters also highlighted the core strengths of the financial services sector.

In December 2013, KPMG published a research report looking at the typical costs associated with operating a financial services firm in Bahrain, Dubai, and Qatar.

This included cost of operations, cost of set-up, and living costs, and the report concluded that overall, the total cost of doing business in Bahrain is almost half that of Dubai and Qatar. The ICD-Thomson Reuters Islamic Finance Development Indicator (IFDI), a numerical measure launched in December last year and representing the overall health and growth of the Islamic finance industry worldwide, highlighted Bahrain's developed Islamic finance sector, ranking first in the Mena region, with total assets worth $47 billion.

Bahrain also had one of the most developed Islamic finance knowledge landscape, and performed well in terms of governance, with a comprehensive regulatory framework covering all aspects of the Islamic finance industry. All GCC countries made it into the top 15 worldwide, with Bahrain ranking first amongst them, demonstrating the overall strength of the Islamic finance sector in the region. – TradeArabia News Service