October 31, 2014 - Nassau, Bahamas – The Right Honourable Perry Christie today expressed confidence in his Government’s plan to strengthen Bank of The Bahamas (BOB), and protect the bank’s customers and shareholders.
The Central Bank of The Bahamas (CBoB) has monitored BOB’s performance carefully. Against the backdrop of a slowing economy, the Governor of CBoB has been informing the Ministry of Finance of the emerging risk posed by some of BOB’s unpaid commercial loans. The Ministry of Finance and BOB, with the support of CBoB, have since developed a plan to protect BOB depositors, strengthen its bottom line, and resolve unpaid loans.
Under this plan, all BOB deposits remain secure and accessible. Here is how the plan works:
BOB’s banking services will continue, and there will be no service interruptions. BOB will undertake decisive action to restore itself to full strength, generating new revenue by launching new services and banking platforms; as well as by reorganizing management of the bank.
The Ministry of Finance has created a new corporation, Bahamas Resolve Ltd. (Resolve), to take over a limited portfolio of up to B$100M in troubled commercial loan assets. The move protects BOB customers and shareholders, returning it to profitability, as well as compliance with CBoB capital and liquidity requirements.
As Resolve uses every commercial, financial and policy mechanism at its disposal to collect payment on the overdue loans, The Bahamas Government will seek new policy initiatives designed to strengthen its business relationship with BOB.
“This shows the effectiveness of our central bank, its supervisory and regulatory tools,” said Prime Minister Christie. “Bank of The Bahamas is the people’s bank. Our resolve to ensure its success is unshakeable. We’re working to protect depositors and shareholders. With an improving economy on the horizon, we have complete confidence in the bank’s future,” he added.
Managing Director Mr. Paul McWeeney says BOB must adjust to the new business environment. “The 2008-2012 U.S. recession affected some of our commercial borrowers’ ability to repay, which hurt our bottom line. This plan returns us to profitability, while allowing us to focus on decisive steps to improve revenue generating opportunities. For example, we are already seeing the benefits of our revamped sales and service functions.”
The Central Bank of The Bahamas endorses the plan. “This puts BOB in a stronger financial position,” said Governor Wendy Craigg. “It facilitates BOB’s compliance with all domestic and international liquidity and capital requirements. Other changes being considered will serve the interest of the bank’s depositors and shareholders to the benefit of all Bahamians; including a reorganization of BOB and its senior management structure.”