KUWAIT Law and Practice Contributed by: Yousef Al Shereedah, Abdulrahman Al-Roumi and Bashayer Al-Tuwais, International Counsel Bureau – Lawyers and Legal Consultants
which mandates the recognition of expected credit losses for financial instruments. • Liquidity regulations: CBK regulations require banks to maintain a liquidity coverage ratio (LCR) and a net stable funding ratio (NSFR). The LCR requires banks to have a minimum of 100% stable funding. • Capital adequacy regulations: The CBK has implemented Basel III standards to improve capital adequacy, which includes higher qual - ity capital requirements and a leverage ratio. • Credit risk regulations: Banks are subject to a loan-to-deposit ratio set at 90%. Credit facilities must be classified into regular and irregular categories based on specific criteria. • Concentration risk regulations: Investment limits restrict a bank’s total securities portfolio to 50% of its capital, and credit concentra - tions to any single customer cannot exceed 15% of the bank’s capital base. Voluntary Codes and Industry Initiatives The governance framework in Kuwait is primar - ily based on statutory requirements. Both the CBK and CMA require CBK-Regulated Entities to align with international best practices, par - ticularly those set by the Basel Committee on Banking Supervision and the IFRS. The CBK’s Governance Instructions include a comply or explain principle, allowing CBK-Reg - ulated Entities some flexibility in adopting gov - ernance practices while adhering to local rules. For instance, during the COVID-19 pandemic, one bank faced difficulties in appointing inde - pendent board members due to government clo - sures and the inability of candidates to complete necessary documentation. After explaining the situation to the CBK, the deadline for appointing the board members was extended. Each CBK- Regulated Entity can establish its own policy and
may adopt any voluntary standard they choose, subject to approval from the CBK. Diversity Requirements There are no formal government-mandated diversity requirements for CBK-Regulated Enti - ties. However, under Cabinet Resolution No 1868 of 2018, banks must maintain a minimum Kuwaitisation rate of 70% for their workforce. This initiative aims to increase the employment of national talent through training programmes. Additionally, several CBK-Regulated Entities have implemented their own diversity and inclu - sion initiatives. These efforts focus on creating inclusive environments and are recognised for their role in strengthening corporate governance and improving organisational performance. Bankers’ Oath or Equivalent Binding Rules of Conduct for Employees Although Kuwait does not have a formal Bank - ers’ Oath, both the CBK Law and Law No 39 of 1980 on Evidence in Civil and Commercial Mat - ters (“Evidence Law”) impose certain conduct requirements on banking employees and impose strict requirements for maintaining banking and client information secrecy. Article 80 of the CBK Law mandates that Cen - tral Bank officials maintain the confidentiality of accounts, books, and documents accessed during their duties, extending this obligation even after their employment ends. Disclosure of this information is only permitted when legally authorised. Article 43 of the Evidence Law prohibits pro - fessionals, including banking employees, from disclosing any facts or information acquired in their professional capacity, even after their ser - vice has concluded.
298 CHAMBERS.COM
Powered by FlippingBook