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Bahrain’s banking system has experienced annual average growth rates of 18 per cent over the past two years. Total assets of the banking industry stood at more than US$180 billion at end-December 2006, compared with US$140.4 billion at end-2005. Of the 400 licensed financial service companies, the number of bank licences now stands at 150.

Industry growth has been supported by an open market economy; stable and prudent macro-economic and fiscal policies; a credible regulatory framework in line with international standards; and a notably strong and well qualified local workforce. All these factors have combined to cement Bahrain's position as a regional banking hub, successfully attracting numerous foreign banking organizations to establish a physical presence in the country.

International banking groups continued to show strong interest in locating regional offices in Bahrain, with Coutts, Dexia, EFG, European Islamic Investment Bank, Merrill Lynch and Royal Bank of Scotland being granted licenses during 2006.