This legal agreement establishes fiduciary responsibility for investor assets, and is a tool used for family succession planning or for companies to protect pension monies. The move marks BahrainÆs gambit to take on Singapore, Dubai and other competitors as a centre for wealth management.
ôThe CBB is putting in place all the processes and procedures required for the full implementation of the law,ö says Mohammed Ayman Al Tajer, director of financial institutions supervision at the CBB in Manama. This includes ensuring their secrecy.
The trust registry follows on earlier moves by Bahrain to set up procedures to issue licenses and conditions for undertaking financial trustee activities.
The concept of trust law is new to the Middle East, but with the regionÆs high-net-worth individuals owning an estimated $1.3 trillion, a figure forecast by the CCB to grow to $1.8 trillion by 2010, there is a huge potential market for wealth management and planning.
ôMany of the regionÆs wealthy, whether individuals or business groups, are sophisticated investors, who are willing to embrace innovative products and wealth management solutions utilising the trust as a structure,ö says Al Tajer.
Graham Journeaux, chairman and COO of Bahrain-based Ohad Trusts, adds, ôThe trust vehicle can provide an additional comfort level for financial instruments, such as sukuk (Islamic bonds), mutual funds and securitization structures, by segregating the assets from the issuerÆs counter-party risks.ö
Pension funds are on the rise in the region, as the Middle EastÆs developing middle class grows, and Bahrain will promote trust arrangements for the protection of employee funds.