By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
A Bank of the Bahamas shareholder yesterday backed the Government’s plan to force all new public service hires to open accounts with the bank, adding that it “must be protected at all costs”.
Dionisio D’Aguilar told Tribune Business that the Christie administration was merely following a long-established private sector practice, namely requiring employees to have accounts at the same bank as the company.
But, while the Government’s rationale for the move is to facilitate direct deposits, and reduce cheque payments, the Superwash president suggested the main objective was to continue “propping up” Bank of the Bahamas and aid its recovery.
Mr D’Aguilar warned that there would be “devastating economic repercussions” if Bank of the Bahamas was allowed to fail, given that its balance sheet at end-June 2015 contained almost $700 million in deposits and $569 million in loans and advances.
As a result, the Government had no choice but to employ “every device” available to it to rescue the BISX-listed institution.
“It makes sense for them to do that,” Mr D’Aguilar told Tribune Business on the ‘new public service hires’ plan.
“The Government ostensibly owns Bank of the Bahamas. It’s their product, which is clearly under enormous financial stress.
“The Government is using every tool in its arsenal to prop it up. It makes sense for them to force employees of the state, the Government of the Bahamas, to use a product they own,” he added.
“Bank of the Bahamas needs every little help it can get. What this demonstrates to me is that they’re short on cash, and the Government is trying to keep as much of it as possible at Bank of the Bahamas.”
While some observers have suggested it is irresponsible to force Government employees to use an obviously-struggling bank, others are arguing that the policy runs counter to consumer choice and is anti-competitive towards rival commercial banks.
Mr D’Aguilar, though, disagreed, saying “most companies” require employees to establish accounts at the same bank, in order to make salary payments easier and avoid associated fees.
Explaining that Superwash did the same, he added: “If the Government mandated that every single civil servant move to Bank of the Bahamas, that might be considered anti-competitive.
“I’m not so dismayed by them doing this. They must protect Bank of the Bahamas at all costs. It’s too big to fail.
“The repercussions of Bank of the Bahamas failing will be devastating for the economy, and the Government is using every single device to pour more money into it to prop it up and make as many people as possible to business with the bank.”
Mr D’Aguilar continued: “If Bank of the Bahamas is not propped up by the Government of the Bahamas, it would have gone by the wayside a long time ago.
“It that was allowed to happen, the fallout and repercussions through the economy will be devastating. We cannot allow a bank with $800 million in assets to fail.”
Bank of the Bahamas shareholders lost almost $100 million during the past two financial years, which also witnessed the Bahamas Resolve ‘bail out’ - where some $45.2 million in bad loans were removed from the balance sheet in exchange for Government paper (bonds).
Tribune Business reported in February how long-suffering Bank of the Bahamas shareholders incurred a further $3.392 million loss during the final three months of 2015, with the institution still non-compliant with key capital ratios.
The BISX-listed institution, unveiling its second quarter and half-year results for the 12 months to end-June 2016, again blamed ‘bad’ loan provisions for losses that now exceed its 2014 ‘bail out’ write-back by almost $20 million.
Bank of the Bahamas has been in non-compliance with two key capital ratios for at least six months, with the breaches dating back to at least its end-June 2015 financial year close.
The only ‘crumbs of comfort’ for Bank of the Bahamas’ shareholders were the fact that the bank’s losses seem to be declining in size.
The fiscal 2016 second quarter loss for ordinary shareholders was down by 40.5 per cent, from $5.697 million to $3.392 million, while the half-year’s ‘red ink’ declined by 62 per cent - from $9.895 million to $3.751 million.
Comments
Chucky 8 years, 1 month ago
If they try to force you to bank there, take your money out every week. Obviously if we need to be forced, we should run from that bank......
Sickened 8 years, 1 month ago
Every government payday there will be very long lines at BoB. Get your cash out as fellow Bahamians.
OMG 8 years, 1 month ago
Is it still the case that several prominent Bahamians still owe millions of dollars in unsecured loans and if so why should employees be forced to put their money in an institution that is run so badly.
sheeprunner12 8 years, 1 month ago
BOB should be saved .............. but what about the abuses that have taken place there as a result of political favours by the top executives and known PLP affiliates???????
....... even though the government owns the majority shares, it must be managed as any other commercial bank. Sadly this was not done in the recent past two administrations.
Tarzan 8 years, 1 month ago
Surprise! Government owned means politically run. That is axiomatic. Any enterprise that you wish to be operated: not to make a profit, not to deliver a critical service, not to benefit its owners and employees, but rather to be a slush fund for handing out jobs to unqualified political "friends" and to provide "favorable deals" for political "friends", well just make such an enterprise "government owned" and you will get all your wishes. It has nothing to do with the political party. It has everything to do with politics.
sheeprunner12 8 years, 1 month ago
BOB is a bank with 65% shares held by the government and thousands of Bahamian shareholders holding the other 35% .......... how is this government owned?? ........ why doesn't the bank divest itself of another 25% of the shares and become a minority owner and board controller??? That would be a good gesture for Halkitis to put forward to Perry
christee 8 years, 1 month ago
This is the most absurd thing I have ever heard. We live in a democracy and as such, no government can force individuals to open accounts at any bank
sheeprunner12 8 years, 1 month ago
But there is a bigger issue here ........... why is this government even considering hiring new civil servants anyway???? ........... oh I forgot (election is in 2017) ......... the civil service is bloated and can be cut by at least 10-15% and the remainder be reassigned and retrained
The IDB has long insisted on this but the government has made little effort to make any worthwhile civil service reform or change the General Orders that govern our antiquated civil service ............ its a form of political patronage at election time or to take care of politicians' friends, families and lovers (the Toogies and Bobos)
bogart 8 years, 1 month ago
The Manager has said that no stone will be left un-turned in his examination of BOB. This seems to be done repeatedly or is it talk for talk sake? What about the Professional Auditors paid to examine wrongdoings audited annually for every years of BOB. What about internal auditors? What about the legal advisors and lawyers who are Approved to do business, haven't they noticed anything? What about shareholders, and what have they done? What about the Central Bank who have been examining BOB, haven't they been noticing anything from years ago? What about customers who have been complaining, or it appears that nothing amiss has been done to any customer out of the thousands who have been banking, wow truly an angelic bank. What about senior managers? What about the Board of Directors noticing anything? What about the staff turnovers and simply judging from new faces it appears that this is indeed the best bank that others must emulate. When are Bahamians going to learn that we do not operate in a vacuum and the world does not notice.
bogart 8 years, 1 month ago
As a nationalist the Bank must be protected if its operations can be justified i.e. we should not have a bank for a bank sake. As a realist, the Bahamian majority of taxpaying poor, what's left of the middle class, unemployed, underemployed have to pay equal 7.5% taxes to support Bahamasair, BEC, Water and Sewage, former Gulf Union Banks savings accounts guaranteed up to I think $50k, Clico,shareholders etc, govt loans to repay for Police cars, Defence Force Boats, Roadworks, Harbors etc and pay salaries to run the country plus National Health Insurance. Too much.
We are already at 7.5% VAT and country's loan repayments at 70% of income. Bahamians with disposable income or money left over from their pay check to buy shares and we the majority Bahamians catching hell struggling to make ends meet and likely to be taxed more have to pay to protect their shares? Are you serious? We already got swung with politicians promising to have the death penalty imposed and we now have to pay some $19,000 annually to feed, clothe and house each murderer and we have have 500 + of them around Nassau. The majority Bahamians do right, follow the laws, go to church are proud of our Bahamas and something is wrong when we the majority get shafted and are forced to support wrongdoing.
Well_mudda_take_sic 8 years, 1 month ago
This comment was removed by the site staff for violation of the usage agreement.
MonkeeDoo 8 years ago
mudda tak sic - AMEN bro !
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