The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

BANK of the Bahamas (BOB) managing director Paul McWeeney has announced the embattled bank will “curtail” its commercial lending business with an increased focus on its retail and electronic banking offerings.

Mr McWeeney said that while the bank still has other commercial plans that are performing “really well”, BOB had invested a significant amount in its retail and electronic banking services. “The bank’s position going forward would be to curtail commercial lending,” he said. “There could be opportunity that comes around that we think is worthwhile but the focus would be on retail banking and also electronic banking. That’s where we have invested a lot of our money over the past several years.”

Mr McWeeney said that “without a doubt” those operations would allow the bank to be profitable going forward. “The bank is piloting a payment card system for social service as well as a payment card system for the general civil service for travel purposes. Internally important initiatives are also underway to positively impact the culture, improve customer service and enhance government accountability,” said Mr McWeeney.

On Friday, the government - which is a 65 per cent majority shareholder of BOB - announced plans to strengthen the bank by through the creation of a new corporation, Bahamas Resolve Ltd, which would take over $100 million in troubled BOB commercial loan assets.

“Of the loans being transferred from BOB to Resolve, none include any loans that were outstanding by what is referred to as politically exposed persons,” Mr McWeeney stressed. “I should add that the total outstanding loans of such persons constitute a comparatively small percentage for total consumer loans outstanding.”

While the government has a 65 per cent stake in BOB, the remaining 35 per cent is widely held by some 3,500 Bahamian shareholders. According to Prime Minister Perry Christie, BOB now has total assets of $771 million, compared to only $93 million when the Government acquired ownership of the bank from the Bank of Montreal 25 years ago. BOB has approximately 40,000 depositors today with deposits totalling $679 million. BOB has total loan assets of approximately $650 million, operates 14 branches in the Bahamas and employs more than 350 Bahamians.

“Our depositors and shareholders should feel bullish about Bank of the Bahamas’ future,” Mr McWeeney said. “I have every confidence that the shareholders will be eyeing stronger share value and renewed profitability.”

Outlining the challenges faced by BOB Mr McWeeney said: “The genesis of the concerns or the challenges the bank faces are similar to all the other banks around the world. The fact is that we had the recession onslaught and the impact that that has had has lasted a bit longer than everyone expected. That coupled with stricter regulation as a result of the fallout from the recession as well as heightened accounting practices has forced all banks to take a different approach towards accessing assists.

“In the environment of the banking sector we have very little flexibility to work our clients. For example if a loan goes 90 days past due that’s non-performing which means certain action takes place. The bank had a very strong focus on commercial lending. We felt that as a part of the foundation of the bank we are here to support Bahamian businesses. We did a great deal of that over the years. That became a major component of our business. Unfortunately that was the hardest hit.”