By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Irate shareholders believe the country needs “a Come to Jesus moment” over Bank of the Bahamas, whose near $100 million losses have again exposed why the Government must “get out of business”.
Dionisio D’Aguilar, the Superwash president, told Tribune Business that all Bahamians were to blame for allowing the Government to take a once-$1 billion institution and “run it into the ground”.
Questioning when people would “wake up and smell the roses”, Mr D’Aguilar said Bahamians and the economy would “suffer the consequences” should Bank of the Bahamas collapse.
“My father said to me: ‘Don’t invest in anything run by the Government’. He was dead right,” the Superwash president told Tribune Business.
Admitting that he had broken this ‘rule’ with a “not significant” investment in Bank of the Bahamas, Mr D’Aguilar added: “I couldn’t invest in anything run by the Bahamian Government even if you gave me the money to put into it.
“Everything the Government has run in the history of the Bahamas, it has run into the ground. We need to have our ‘Come to Jesus’ moment, put this thing [Bank of the Bahamas] behind us, sell it off and be done with it. Get the Government the hell out of running and owning a business.”
The Government’s continued support may avert a total Bank of the Bahamas collapse, even though it is unable - or unwilling - to make the multi-million dollar equity capital injection to restore the institution to sustainable financial health and profitability.
And the bank’s 2016 financial year first quarter appears to have offered a glimmer of hope, via a 91.4 per cent reduction in year-over-year losses for the 2016 first quarter.
Bank of the Bahamas’ red ink dropped from $4.198 million in 2014 to $359,365 for the three months to end-September 2015, but it is far too early to label this a trend towards the return of sustainable profitability.
Wayde Christie, the bank’s managing director, delivered an upbeat message to shareholders by stating that its medium to long-term outlook was positive.
“Achieving operational efficiencies, sustainable growth, and dealing aggressively with our non- performing loans remain primary focuses for the bank and, despite the challenged economic environment, our outlook is positive for the medium to long-term,” he said.
“Increased value for each of our stakeholders is still a paramount commitment. The bank continues to take prudent steps to ensure it returns to profitability in the earliest timeframe.”
Mr Christie’s comments, though, were short on specifics. And he did not divulge details of the “strategic plan” for Bank of the Bahamas’ recovery that has been approved by the Board of Directors.
Nor did he comment on the $30 million-plus net loss incurred during Bank of the Bahamas’ 2015 financial year, which ended on June 30, and his reference to the ‘medium and long-term outlook’ indicates shareholders will continue to endure pain in the immediate future.
All of which is likely to feed further disillusionment among Bank of the Bahamas’ 3,000 minority shareholders, who collectively own 35 per cent of its equity.
Mike Lightbourn, another shareholder and president of Coldwell Banker Lightbourn Realty, told Tribune Business: “I’m not surprised. It’s just more of the same. They don’t seem to have a clue what they’re doing.
“They can say they’re cutting their losses, I guess. But the whole Board should resign. Many of them, after the last AGM, said they’re going to fix things and it’ll be much better next year. It’s a joke.
“The Government will keep propping it up. If it were a regular financial institution, they would have been dead in the water a long time ago. The Government wants to make excuses about its issues.”
Mr Christie, in describing the 2016 first quarter results as “encouraging”, conceded that the continual losses were being driven by Bank of the Bahamas’ high - and aging - level of delinquent loans, plus falling collateral values securing its credit book.
“The bank recognised net loan loss provisions of approximately $2.6 million during the quarter versus $3.7 million, or 31.19 per cent less, than the provision expenses recognized in the prior year,” Mr Christie wrote.
“Total operating income for the quarter increased from prior year by approximately $2.4 million or 31.17 per cent, and is primarily owing to an increase of $0.3 million in interest income, a decrease of $0.4 million in interest expense and a $1.4 million increase in other operating income.
“Deposits grew by $9.1 million since the fiscal year ended June 2015, primarily in demand deposit products, and other operating income grew by $1.4 million due to non-recurring rent forgiveness.” Operating expenses were down by $0.3 million or 3.31 per cent.
This, though, failed to impress Mr D’Aguilar, who compared Bank of the Bahamas’ current condition to that of the Government-owned and operated Bahamas Development Bank (BDB).
He added that the Government should have sold Bank of the Bahamas, and exited the commercial banking business, years ago but “got greedy” when it enjoyed success during the pre-recession ‘boom’ years.
“The bottom line is that if not for the Bahamian people, through the Government of the Bahamas, Bank of the Bahamas would be insolvent and in liquidation,” Mr D’Aguilar told Tribune Business.
“It’s being propped up by the Government of the Bahamas, and it’s probably too big to fail. The Government of the Bahamas does not know how to run a bank. That bank has run into the ground.”
Mr D’Aguilar argued that “there are a litany of things that went wrong” at Bank of the Bahamas, including the practice of granting overdraft facilities to delinquent borrowers so their original loans could be made current again.
The bank’s full year 2015 financial statements confirm that almost $40 million worth of business and personal overdrafts were subject to specific provisions that year because they were tied “to certain non-accrual mortgage and commercial loans”.
That figure was down from $64 million the previous year, and Mr D’Aguilar said it was just one example of a break down in internal controls, “inappropriate loans” and “not following best practices”.
“We Bahamians have run this into the ground. We’re the ones to blame, and we’re going to pay the consequences, jeopardising our economy because of it,” Mr D’Aguilar added, hitting at “political interference” in Bank of the Bahamas’ affairs by both PLP and FNM administrations.
“What else do we have to see to get it? When we put politicians in charge of things, they don’t run them properly.”
Mr D’Aguilar said the Government needed to employ the business models pioneered at Arawak Port Development Company (APD), the Nassau Airport Development Company (NAD) and, potentially, BEC, where the Government turned over major infrastructure assets to private sector management and allowed them to be operated as a business.
Comments
asiseeit 8 years, 2 months ago
The Government of the Bahamas is a failure and could not manage a hill of beans. This country was once a shining beacon to investors and tourists alike but after 43 years of miss rule and corruption we have become just another post colonial failure just like most third world African country's. What that says about the supposed leadership of this country would make any ethical, moral and honest man hang his head in shame. Not in the corrupt Bahamas, no we have a P.M. that is actually proud of his mismanagement and destruction of OUR country. The future is looking very bleak indeed!
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