By AVA TURNQUEST
Tribune Chief Reporter
DEPUTY Prime Minister and Minister of Finance K Peter Turnquest yesterday pledged the government’s planned $166m “rescue” for Bank of The Bahamas will be fully debated in Parliament.
Mr Turnquest acknowledged that a second “bail out” for the beleaguered bank “tests the patience and confidence of the public”, but ultimately defended the move as the government’s duty to act in the best interest of its shareholders and the industry.
“We intend to go to Parliament to have the rescue fully debated which should have been done with the prior deal,” he told The Tribune in an interview yesterday.
He also committed himself to disclosing the details surrounding the first Bahamas Resolve transaction, telling The Tribune “to the extent that we can, I will”.
“We fully appreciate that the public’s patience and confidence has been tested with this second effort,” Mr Turnquest said, “but we believe that the bank, operated without political interference and free of a book of bad loans that should have been addressed years ago, will pay off in the medium term.
“The government of The Bahamas as the majority shareholder has an obligation to its depositors and minority shareholders to act in their best interest as well as the industry. We are confident that the action taken to secure the bank’s path to profitability and return of shareholder value is the best option available.”
He continued: “We are likewise confident in the newly elected board of directors and their plan to restructure and strengthen the bank’s governance and market position.”
Resolve is a state-owned and controlled company that was established in October 2014 to assume liability for $100m of BOB’s non-performing commercial loans.
The “bail out” came under scrutiny on the general election campaign trail earlier this year after former Prime Minister Hubert Ingraham questioned how the deal was authorised without the approval of Parliament.
In early February, then Prime Minister Perry Christie said his administration would soon make a full disclosure on the current affairs of BOB and Resolve Bahamas. However, no such disclosure was made.
According to Tribune Business, the new “bail out” is essentially a repeat of the first Bahamas Resolve transaction, although the sums involved are much higher.
The latest rescue will remove some $166m worth of “toxic” commercial loans from BOB’s balance sheet and transfer them to the Bahamas Resolve special purpose vehicle (SPV).
The loans, which are to be paid for at gross book value, will be exchanged for promissory notes (government IOUs or bonds) that will be provided by Bahamas Resolve.
While in opposition, the Free National Movement was critical of the Christie administration’s actions relating to BOB and Resolve Bahamas.
In January 2015, Prime Minister Dr Hubert Minnis, leader of the Official Opposition at the time, led about 100 supporters on a march to BOB’s Shirley Street location.
“We have assembled here at the people’s bank to declare with one loud voice that enough is enough,” Dr Minnis said on the steps of the bank at the time. “The government must act and they must act now. The use of government voting power to prop up failed leadership in the bank is unacceptable, when the Bahamian taxpayers have been made to swallow a $100m increase in the public debt load in order to prop up the same bank.
“The bank’s present leadership must go and they must go now.”
At the time, Dr Minnis also called on the government to “cause for an immediate forensic audit to be conducted of all decisions made by senior management which contributed to the potential collapse of the bank, the need for intense Central Bank intervention and ultimately the need for a government bail out”.
Shortly after winning the May 10 general election, the government announced BOB, among other institutions, would undergo a forensic audit.