Commonwealth Bank’s shareholders have voted unanimously to jumpstart its response to potential regulatory capital deficiencies almost 10 years ahead of time
Investors voted at its May 15 annual general meeting (AGM) to amend the bank’s Articles of Association with respect to its preference share rights, in order to comply with the Basel III definition of approved regulatory preference shares by 2023.
Basel III is a set of international standards developed by the Basel Committee on Banking Supervision to strengthen global capital and liquidity rules.
This is designed to promote a more resilient banking sector, better equipped to absorb any shocks arising from financial and economic stress.
The standards, now adopted by regulators around the globe, require banks to comply in full by 2023, but Commonwealth Bank is leaping ahead, meeting the 10-year requirements approved by the Central Bank of the Bahamas a decade in advance.
“In planning for the implementation of Basel III, we have judiciously responded to proactively and immediately address any potential shortfall of regulatory capital resulting from this standard, as it is progressively implemented over the next 10 years,” said Commonwealth Bank chairman, William B. Sands Jr.
The move affects some $50 million in unissued preference shares, making them non-cumulative and redeemable only after five years with the prior approval of the Central Bank. However, the most important term - the rate of return for investors - was unchanged at Bahamian Prime plus 1.5 per cent.
“Although the shares are non-cumulative, the reality is that we have never experienced a period where our profits were insufficient to pay dividends. That simply has never happened,” said Mr Sands.
“Commonwealth Bank has paid quarterly dividends every single quarter to both common and preference Shareholders since Commonwealth Bank became 100 per cent Bahamian-owned in 1984, in addition to the many extraordinary dividends that our common shareholders have enjoyed.”
Commonwealth Bank, with some 550-plus staff members and more than 6,000 shareholders, operates branches in New Providence, Grand Bahama and Abaco.
Last month, the bank’s Oakes Field branch was forced to close following a fire that broke out during a record rainfall and lightning storm.
That branch relocated and re-opened less than two weeks later in the Burns House Building on John F. Kennedy Drive and Bethel Avenue, offering all the products and services offered at the Oakes Field location, including Saturday banking.