By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Bahamas Development Bank must become "self-sufficient" by 2020, which is when the Government will cease contributing $3 million annually towards its bond interest payments.
K P Turnquest, the deputy prime minister, told the House of Assembly that "the onus" is on the BDB's new Board and management to make the organisation financially viable, and fulfill its mandate of financing Bahamian entrepreneurs' ventures.
He urged delinquent BDB borrowers to agree payment plans with the institution, emphasising that while the Government did not want to close businesses and seize collateral, capital needed to be freed-up to assist new entrepreneurs.
Disclosing that the Government pays $3 million annually to the BDB "in support of its bond interest", Mr Turnquest revealed: "The bank has been told that within three years the Government of the Bahamas will cease that support, and they will have to be self-sufficient. The onus is on them to perform."
An extraordinarily high level of loan delinquencies, coupled with a seeming reluctance to secure collateral for these borrowings, has been a key factor behind the BDB's struggles and strained financial performance.
Its ability to finance, and assist, good quality ventures by Bahamian entrepreneurs has been substantially diminished, with Mr Turnquest yesterday reiterating that the BDB was "being restructured with the aim of becoming self-sufficient".
This is also designed to provide new lending capital, and the Deputy Prime Minister said controls and management were being put in place to ensure the BDB "does not become a burden on the public purse".
"I call on delinquent borrowers to go in and make arrangements," he warned. "We have no interest in forcing people out of business or taking away businesses, but the Government has a wider obligation to the Bahamian people to ensure the BDB can fulfill its mandate and remain viable so it can assist other Bahamians."
Turning to the troubled Bank of the Bahamas, Mr Turnquest criticised the former Christie administration's October 2014 rescue plan for removing too few toxic loans from the balance sheet, suggesting there may have been "one of two untouchables".
Referring to the latest $166 million non-performing loan transfer to Bahamas Resolve, the Deputy Prime Minister said: "A lot of those loans should have been transferred in the first rescue plan.
"Having kept them on the books of Bank of the Bahamas, and continuing to be non-performing, dragged down the ratios of the bank and made for an unsustainable position.
"It was unfortunate the way it appeared to have been done. There may have been one or two untouchables, I don't know, but it was not operating optimally. While it [the first rescue] may have helped, it did not address all the issues at the bank."
Mr Turnquest argued that the latest $166 million toxic loan transfer had better cleaned up Bank of the Bahamas' balance sheet, and freed up capital for it to begin lending again.
The Deputy Prime Minister expressed confidence in the ability of the bank's Board and management to "create value for Bank of the Bahamas shareholders and wider society through innovative and creative financial products to help secure their lives and futures".
Comments
bogart 6 years, 7 months ago
The Development bank, the Bank of the Bahamas and the Bahamas Mortgage Corp.share similar functions, are wholly owned by the public, all located on the Island of New Providence (BoB has additional outlets on Cat island, Bimini, GB, etc) all are struggling.
Remarkedly and bizzarely no politician or no Director of any of their politically appointed Boards or no senior Manager all appointed by the govt has seem fit to amalgamate or merge three into one which will be best.
One rent bill, one lighg bill, one computer dept, one Human Resource office, one Board of Firectors, loan dept, one Collections Dept, etcetcetc. Savings will br enormous to free up time and money.
Other synergies can be had if Mortgage customers with equity and good business plan want to get small business loans, savings customers can be encouraged to get homes, by amalgamating customers in Andros, Cat Island and Bimini can also enjoy wider service to get loans for govt low cost houses etc, loan to farm, tourism craft and souvenir products, losns for lodges, ecotours, businessetc, loans to develop those family islands and possily expand into other islands too. Islands will be repopulated, opportunities created.
Pity what seems to be a simplier project to develop and create development for additional revenue than the implementation of taxing implementing VAT etc has not been tried over the decades and pouring hundreds of millions iwith public money into Bank of the Bahamas and Development Bank and Mortgage Corp and no investigations or noone jailed for wrongdoing.
Mr2Questions 6 years, 7 months ago
Why the hell is this Minister K P Turnquest, the deputy prime minister sucha CRY BABY omg Man if you can't handle the Portfolio of Minister of Finance give up the office and go back to doing whatever the hell you did before! THE MAN IS A BIG CRY BABY WITH NO IDEAS!
jujutreeclub 6 years, 7 months ago
Think it's an excellent idea. All these entities that borrowed from BDB and are not paying their loans back need to start paying of their loans. Just like the education loans, some benefitted and now that others want to borrow, can't because the authority is broke. I say start freezing assets from these borrowers and allow others to benefit from the same loan benefits that the delinquent borrowers were able to. Too much slackness in these departments. Those who really need the help really can't get it because of those who can afford to establish businesses on their own borrowed and refused to pay.
DDK 6 years, 7 months ago
How can we write off 166 MILLION DOLLARS and then pledge ANOTHER NINE MILLION, or is it TWELVE MILLION, to this BOB albatross? Is this at all sane? Where is the list of debtors?
banker 6 years, 7 months ago
Shut the thing down.
sheeprunner12 6 years, 7 months ago
The people DO NOT get to select PM and Cabinet ...... We elect MPs who represent parties ..... But once the oligarchy is elected, the citizens are powerless ...........we sometimes end up with a benevolent Kleptocracy like the former Perry government ................... that is Bahamian-style Democracy since 1967........... Let us pray that Minnis will not be of the same product.
bogart 6 years, 7 months ago
Bearing in mind that the DPM sat across the parliamentry table and no less as an accountant representing thr Bahamians from a economically devestated island who should have been the most qualified person to be making the most with the fewest dollars.
And bizzarely after all the sitting in parliament is to join the team and be asking where the VAT money gone? Equally puzzling is after all the talk of this is the peoples time one would expect other persons to be charged particularly in the Bank of the Bahamas continuing fiasco and I repeat after sitting at the same parliament table is to just pour the same peoples momey of the same people who you are shouting its the peoles time into the BOB is weird.
Amputate the diseaeed limb before it off before it poisons everything.
Seems to be suffering from the disease when persons sre kidnapped they turn out sympathising with their captors.
Would like to think about Minister D Aguilar as Finance Minister. He has been been amputating to salvage business.
baldbeardedbahamian 6 years, 7 months ago
"ensure the BDB "does not become a burden on the public purse", what? BDB has been nothing except a burden since it was conceived under the corrupt swindling administration to provide some high paying jobs to plp party supporters lending money the government had borrowed on the international market to other party supporters at an interest rate that was lower than the rate at which it was borrowed if defaults were factored in. Like many things that our state elected officials do, it was and will continue to be a recipe for fiscal stupidity.
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