The announcement clears the way for RBS to develop a physical presence for the first time in the Middle East and North Africa region.
It is expected that both RBS and Coutts will focus on growing their private banking and wholesale banking operations in the region, as well as potentially exploring Islamic banking opportunities.
Commenting on the granting of the license, the CBB's director of licensing Ahmed Abdul Aziz Al Bassam said that RBS was likely to benefit significantly from the move.
"The CBB is delighted to welcome the RBS Group to Bahrain's mature and well-diversified international financial centre," he said.
"The countries of the Gulf Cooperation Council (GCC) are experiencing a renewed economic boom and a presence in this market will, without doubt, strengthen RBS's business not only in this region but in the wider Middle East as well."