The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian regulators expect to complete their work on a National Financial Crisis Management Plan by late 2013 or early next year, the Central Bank governor telling Tribune Business they were “completely vested” in the extra resiliency this would create in the industry.

Creating such a plan was among the key recommendations contained in the International Monetary Fund’s (IMF) recently-completed assessment of the Bahamian financial industry’s stability, but Wendy Craigg said regulators had begun work on this back in November 2012.

Apart from the Central Bank, Securities Commission and Insurance Commission, Mrs Craigg said the effort also involves the Attorney General’s Office and Ministry of Finance.

“Work on the actual preparation of our plan got underway in February 2013, when a comprehensive crisis management project plan, developed by the Central Bank, was agreed by the other regulators,” she told Tribune Business.

“We have since established a project management team, with membership drawn from all stakeholder regulators. Incorporating the lessons from our workshop and information gained from our peer supervisory agencies, each domestic regulator is now assessing their current state of crisis preparedness in areas such as legislation, resolution options, regulatory readiness, early warning systems, communication strategies, regulatory reporting, and IT infrastructure.

“This work should be completed by end-July 2013, and is fundamental to moving the project towards full completion, anticipated in late 2013/early 2014.”

Mrs Craigg said the goal was to develop a strategy to quickly detect, and resolve, “a systemic financial crisis” that could harm the Bahamian financial services industry.

“Our goal is to ensure the resiliency of the sector by strengthening, where necessary, our governing legislative resolution regimes and early warning systems,” she added.

Elsewhere, the IMF report also recommended that the Central Bank recruit “specialist staff” to help with its regulatory and supervisory responsibilities.

Mrs Craigg told Tribune Business these needs were constantly being assessed, and described the Central Bank’s bank supervision department as its largest, accounting for an average 13 per cent of total outlays over the past four years.

“This recommendation is not unique to the Bahamas,” she added.

“The nature of the banking supervision work is becoming more complex, and most agencies are challenged with resource constraints in implementing and examining areas related to the new capital standards, which require scarce risk management skills that have come at a high premium.

“We continue to augment our resources through a combination of direct hiring and short-term engagements of experts, where necessary, to ensure that we are able to progress our work agenda.”

As for the IMF’s stress testing results, Mrs Craigg said they showed that despite high levels of non-performing loans, “there are no immediate concerns to the stability of the banking sector”.

She added: “Our banks have, on average, capital levels of some 23 per cent, which is above the Central Bank’s established trigger and target ratios of 14 per cent and 17 per cent, respectively.

“Our credit stress test results basically revealed that, given the average level of capital in the system, there would have to be significant shocks for a prolonged period of time before capital levels across the system fall below the benchmarks.”