The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s collapse into receivership will “not have a significant impact” on Scotiabank (Bahamas) 2015 financial results, even though its equity stake in the project has effectively been written down to zero.

Bruce Bowen, Scotiabank’s senior vice-president for the Caribbean, told Tribune Business that observers would be “hard pressed” to find any fall-out from Baha Mar in its financial statements, due to the bank having provided for it in earlier years.

“The majority of the impact was taken several years ago,” Mr Bowen said. ‘We were very conservative on it.

“Anyone looking at our statements will be hard pressed to find it.”

He was backed by Scotiabank (Bahamas) managing director, Sean Albert, who added: “It was not a significant impact [in 2015] relative to our capital.

“The bottom line is that we were conservative in managing that experience.”

Scotiabank took an ownership stake in the $3.5 billion Cable Beach development several years ago, after it agreed a partial ‘debt-for-equity’ swap with Baha Mar’s principal, Sarkis Izmirlian and his family.

The bank provided around $200 million in debt financing to finance the 2005-2006 acquisitions of the then-Radisson and Wyndham hotels, plus the Crystal Palace casino, from their respective owners, the Government and Philip Ruffin.

With the repayment deadline causing some concern for both sides, Scotiabank ultimately ended up accepting a part-repayment of the principal it was owed, and converted the rest into an equity stake in the $3.5 billion development.

However, Baha Mar’s fall into Chapter 11 bankruptcy protection, and subsequently into court-supervised provisional liquidation and then receivership by its $2.45 billion Chinese financier, has effectively wiped out the value of all equity stakes - including those belonging to the Izmirlian family and Scotiabank.

Mr Bowen said the greatest impact from the Baha Mar debacle for the bank had been the effect on confidence among the Bahamian private sector and consumers.

He added that the Bahamas still possessed strong economic “fundamentals” compared to many countries in the Caribbean, given its better sovereign credit rating higher per capita income levels; strong governance; and sound financial system.

“The book of business is really growing after several years of gradual decline,” Mr Bowen told Tribune Business of Scotiabank (Bahamas).

“There’s a lot of opportunity in the small and medium-sized businesses. We’ve invested a lot into the small business platform, where clients can borrow up to $500,000, and we’re trying to streamline and make very efficient the process of applying. It’s an important area of the economy and we’re looking to grow that.

“If we can bring the technology of online banking platforms, and merchant and card technology, and provide good solutions there, there’s a lot of room to grow.”