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Surprise Bob Rescue Plan Weeks Away

Deputy Prime Minister K Peter Turnquest.

Deputy Prime Minister K Peter Turnquest.

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Deputy Prime Minister yesterday pledged that “a comprehensive plan” to rescue Bank of the Bahamas will be unveiled by its August 2 shareholders’ meeting, the institution having “abandoned” its legal battle with the Central Bank.

K P Turnquest told Tribune Business that the stricken BISX-listed bank had also become “fully compliant” with the regulator’s capital requirements, an assertion that might surprise its dividend-starved preference shareholders.

Placing Bank of the Bahamas among “the top considerations” for the Minnis administration, Mr Turnquest emphasised that there would be “no political interference” in Board and management decision-making under this government.

The Deputy Prime Minister suggested that this had contributed significantly to the bank’s nine-figure losses, and the potential systemic risk it continues to pose for the banking system and wider economy.

He promised that the new government’s turnaround plan, for which he revealed no details, would restore shareholder and depositor confidence by returning Bank of the Bahamas to “sustainable profitability”.

“We are obviously intent on fully supporting the bank, and we’re going through a structuring exercise at the moment to determine how that will look,” Mr Turnquest told Tribune Business.

“That restructuring plan will be rolled out at the AGM (annual general meeting) or before. We are putting the final touches to that, and the final plan will be unveiled at or before the AGM.”

Mr Turnquest, who has ministerial responsibility for Bank of the Bahamas as minister of finance, declined to provide specifics on the Government’s restructuring proposals other than to describe it as “a comprehensive plan”.

He did, though, confirm that the BISX-listed institution, which is 82.58 per cent majority owned by the Government, had ceased its resistance to the Central Bank’s regulatory demands.

“That has been abandoned,” Mr Turnquest said of the Supreme Court action. “We have been able to satisfy ourselves there’s no need carry forward with that action.”

Tribune Business revealed earlier this year how Bank of the Bahamas had sought judicial protection from the Central Bank’s impositions prior to the May 10 general election.

It had asked for a court-imposed ‘stay’ of the regulator’s demands for an “immediate” $50 million increase in loan loss provisions, and the initiation of legal action against “politically exposed” bad borrowers.

The Central Bank had also wanted Bank of the Bahamas to “convert the first $10 million tranche of contingent convertible bonds to common equity Tier 1 capital, and all future capital injections must be paid in cash and constitute common equity Tier 1 capital” - a requirement the bank has since complied with.

Despite the ongoing concerns over its solvency and compliance with the Central Bank’s capital requirements, Mr Turnquest yesterday said Bank of the Bahamas now met its regulator’s stipulations.

“We’ve already dealt with our capital ratio requirements,” he told Tribune Business. “The bank is fully compliant at this point. That particular issue is not a concern. We’re within the requirements of the Central Bank in terms of capital.”

The Deputy Prime Minister’s assertion may surprise some of Bank of the Bahamas’ preference shareholders, who were last week informed that a second consecutive bi-annual dividend payment due to them will not be forthcoming.

The BISX-institution informed Class A, B, D and E preference shareholders that it was “not allowed” to pay a dividend, which many interpreted as a sign that it had yet to meet the Central Bank’s capital ratio and solvency standards.

Mr Turnquest’s comments, though, bring this belief into question, although Bank of the Bahamas’ ‘accumulated deficit’ and consistent losses may be other factors acting as a dividend ‘bar’.

The Deputy Prime Minister, meanwhile, promised that the Minnis administration would follow through with efforts begun under its predecessor to have independent directors appointed to Bank of the Bahamas’ Board.

“There was a nomination that was made, and we will carry through with that,” he said. “Two names were suggested, and we’re speaking to them. We’ve selected one.”

That individual, who Mr Turnquest declined to identify, will be nominated to the Board - and ratified - at the August 2 AGM. They will represent the interests of the 17.42 per cent minority investors, making a break from Bank of the Bahamas’ Board that have been 100 per cent selected by the Government.

Mr Turnquest said the Government would not interfere with Board decision-making, adding that management changes would be left to the directors’ determination.

“We have appointed a very competent Board of professional persons who have experience in the industry, and relevant experience in other areas, which brings depth and expertise to the Board,” he told Tribune Business.

“They will make decisions as to the composition of management. We do not intend to interfere with the bank at the political level. That’s what got us into the situation we’re in. We’ll leave it to the professionals of the Board to make the appropriate decisions, and we’ll trust their judgment.”

Mr Turnquest was responding after Darron Cash, the former chairman, suggested that changes at management level - as well as a new Board - were required to properly turn Bank of the Bahamas around.

Shareholders are also likely to query yesterday’s announcement that Bank of the Bahamas plans to establish a physical presence on Bimini to replace Royal Bank of Canada (RBC), given that $130 million-plus losses over the past four years suggest consolidation - rather than expansion - is required.

The bank’s latest financials showed that its total comprehensive loss for the nine months to end-March 2017 jumped by 69 per cent year-over-year, growing from $6.707 million to $10.793 million.

A staggering 46.07 per cent, or $234.886 million out of a total $510 million loan portfolio, was non-performing at end-June 2016.

Pledging to restore confidence in the bank, Mr Turnquest said: “It’s certainly up in the top considerations for the Government.

“We recognise that many Bahamians have their investments in Bank of the Bahamas, and that the bank has had some challenges over the years for no other reason than weak policies, and we’re seeking to remedy that.”

He emphasised: “It’s a priority area, and we recognise the effect it has on the economy and financial services industry, which is why we want to protect it and shore it up so depositors and investors are protected.

“We’re very confident we’ll be able to sort it out. Investors, depositors and the Bahamian people as a whole will be confident and appreciate the restructuring effort that is planned. We believe we will bring confidence to the future stability and profitability of the bank.

“We are confident the plan we’re going to put forward will result in the bank’s return to profitability, and paramount is the intention to protect the depositors and investors, and generate the kind of confidence in the institution that will make it sustainable.”

Comments

jujutreeclub 2 years, 11 months ago

Well the first order of business is to deal with those Politically Exposed Persons (PEP's). Start pressuring them to repay their outstanding loan balances. I owed them monies and was charged every month, if not paid on time interest and late payment fees. These people are no different from me other than they can afford to pay their debts but refuse to, Start naming and shaming, whether FNM, DNA, UBP, BDP PLP. Name all who refuse to repay and take legal action where necessary. Don't leave no stone nor name unturned.

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Well_mudda_take_sic 2 years, 11 months ago

Mr Turnquest emphasised that there would be “no political interference” in Board and management decision-making under this government.

"NO POLITICAL INTERFERENCE" MY ARSE!! THEN WHY IN THE HELL IS KP TURNQUEST RATHER THAN THE NEW CHAIRMAN OR MANAGING DIRECTOR OF BOB MAKING THESE KINDS OF ANNOUNCEMENTS??!!! WHY IS THE NEW BOARD CONTENT TO HIDE BEHIND THE NEW MINISTER OF FINANCE???!!!!

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ThisIsOurs 2 years, 11 months ago

EXACTLY!!!! His statements continue to tell us that he has no understanding of economic factors. Two weeks before the grand plan, the best thing for him to do was keep his mouth shut and announce the grand plan at the AGM. I kept reading to see if he was ambushed at some public event, maybe the Bahamar thing, but I was trying to understand why BOB would be a topic of discussion.

KP is seriously out of his depth.

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DDK 2 years, 11 months ago

Really. How can there be no political interference when this entity is 82.58% owned by the Bahamas Government??? These folk do say some funny things. I fear this bank will be no better run than a national lottery, which is quite sad. Too much smoke and too many mirrors.

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sheeprunner12 2 years, 11 months ago

Based on what is going on with the Canadian mega-banks right now ........... it is in the government's best interest to clean up BOB, make BOB shares available to Bahamians and create a National Cooperative Bank with branches on EVERY major island ......... But some effort must be done to rein in the parasitic numbers houses ........ Turnquest must address webshop abuse.

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DDK 2 years, 11 months ago

Would you put money in a bank some 80% Bahamas Government owned? Suppose another gang of crooks gets back into power (God forbid)? Shares to Bahamians sounds reasonable. Majority shareholder, The People or The Government? Would there be a limit of shares per person? Branches on every major island sounds good. About the numbers houses, mum seems to be the word. Those dens of iniquity should simply be CLOSED.

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Reality_Check 2 years, 11 months ago

Does the new Chairman of BoB and his new fellow board members agree with everything said here by our new Minister of Finance or will we soon find out from them that KP misspoke as only a typical interfering politician is inclined to do? BoB's stakeholders want and deserve to hear directly from the new board and not from yet another cabinet minister inclined to regularly interfere in BoB's affairs. No doubt the actions of the past and current government to date have totally wiped out the unsecured equity shareholders and are now eating into the secured investors' stake in a big way. Will anyone serve time behind bars for all of the abuses and misconduct (tantamount to outright instances of theft by politically connected persons) that have resulted in the implosion of this once rock solid financial institution?!

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Well_mudda_take_sic 2 years, 11 months ago

Insiders were able to avoid their share of the losses (making the losses of those left holding the empty bag that much greater) because of the prolonged cover up of BoB's fraudulent lending practices by the likes of Paul McWeeney, Richard Demeritte, Perry Christie, Michael Halkitis, Wendy Craigg and so on. The real crime here is that a known insolvent bank was allowed to keep its doors open to the public and continue its listing on BISX simply because the aforementioned individuals could not care less about the taxpayers and national insurance fund stakeholders being stuck with a huge tab (in the hundreds of millions of dollars) that could only ever be settled by additional increases in our already unsustainable level of national debt. Who's gonna do the time for the many crimes involved here?!

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Reality_Check 2 years, 11 months ago

Insolvent is right! Whatever comfort letters/guarantees that the known corrupt Christie-led government of the day may have signed in an effort to keep BoB's doors open for business should never have been relied on by the Bank Supervision Department of The Central Bank (headed by the Governor Wendy Craigg and now John Rolle), the external auditors (initially Deloitte and later E&Y), BISX (Keith Davis) and others. By the second year of the last Christie-led government there was considerable information in the public domain about the pervasive corrupt activities involving an alarming number of cabinet ministers who had abused their public office and the public trust through acts of malfeasance or nonfeasance. By that time it was also well known that our country was teetering on the verge of being unable to meet its foreign currency obligations to foreign creditors, including the so called 'international lending agencies' controlled by the U.S. and OECD interests, with failed statehood now squarely staring at us....it's only a matter of time! Any lawyer worth his or her oats should be able to make this winning case against many of those named above!

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TalRussell 2 years, 11 months ago

Comrades! Back in 2015 the leader red shirts opposition was asked by a reporter about the loans that were approved under the red shirts administrations, Minnis said the 'PLP government' should lay everything on the table.
PM Minnis, will you now 'walk ya talk' by using your House seats majority to appoint a select committee and lay all the names red shirts on the table? If not, why the hell not?

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by TalRussell

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