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Fidelity Bucks 'Blanket' Loan Deferral Trend

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Gowon Bowe

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A BISX-listed commercial bank says it will not be making "grandiose statements" of "blanket" COVID-19 loan deferrals and instead plans to continue its post-Dorian "case-by-case basis" approach.

Gowon Bowe, Fidelity Bank (Bahamas) chief financial officer, pledged to Tribune Business that the institution will treat borrowers "fairly" despite declining to follow the "blanket" three and six-month loan repayment holidays offered by the likes of Royal Bank of Canada (RBC), CIBC FirstCaribbean and Commonwealth Bank.

Arguing that its Dorian response had worked well for bank and customer alike, Mr Bowe said Fidelity had found such blanket deferrals were often abused by delinquent borrowers to further avoid their "obligations" which diverted resources away from efforts to help clients truly in need.

"The reality is that we as a financial institution appreciate our customers are going to go through some challenging times, and what's most important is to make sure we engage with them to understand their financial circumstances and what is best suited to them.

"It's not to take the blanket approach. In reality we will not be making blanket statements about loan deferrals. Those in need we will assist, but not those already poor performing loans looking for any type of deferrals to further avoid their obligations. We are going to deal with customers on a case-by-case basis.

"The situation of a blanket deferral is also giving a benefit to those who don't need it, and that limits our ability to direct resources to those who do," Mr Bowe added. "We are not going to let the innocent suffer for the guilty.

"We have to ensure we are treating the customer in a manner, as those are the persons who we live and die by in our business. Our statements might not be as grandiose, but our approach is going to be far more targeted."

Mr Bowe said Fidelity Bank (Bahamas) had reduced its loan portfolio exposure to tourism industry workers to around 10 percent, having realised during the 2008-2009 recession that the sector was highly volatile and exposed to global shocks. He doubted other institutions' exposure reached as high as 20 percent.

Comments

Well_mudda_take_sic 3 months, 1 week ago

A good decision by Fidelity. This decision avoids the moral hazard associated with letting borrowers think they need not be as responsible as they should be in instances where they do in fact have the financial wherewithal to make good on their scheduled loan repayments. Of course this does not mean that Fidelity is not willing to work with those who are able to demonstrate to Fidelity's satisfaction that they are truly struggling as a result of the impact of the Red China Virus on our economy.

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bones4food 2 months, 3 weeks ago

How can he state that he won't let the innocent suffer for the guilty,when the whole world right now is besieged by this Plague,what's going to happen is that he will cost the Company a Whole Lot of Clients when its over,and the other Lending Institutes will Pick them up......very Silly Decision.

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