The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank is urging all licensees to ensure their offices can withstand a Dorian-type Category Five hurricane after 25 per cent said they had never confirmed Bahamas Building Code compliance.

The regulator, unveiling the results of a July 2020 hurricane preparedness survey of Bahamian banks and trust companies, said the results showed "an appreciable minority... need to confirm that their core buildings will withstand a Category Five hurricane, including reasonably predictable storm surges".

While 84 percent of survey respondents "expressed confidence" that their offices were compliant with the Building Code, the Central Bank revealed that one-quarter of supervised financial institutions had never verified this was the reality. Some 32 percent said they had checked this in 2018 when the majority of the industry's Business Continuity Plans (BCPs) were ratified.

The survey, undertaken to determine the financial services industry's resilience and ability to withstand a Hurricane Dorian-type scoring a direct hit on New Providence, as well as the speed at which it could resume providing services to business and individual clients, also found that the sector needed to do more to aid staff who were themselves displaced by such storms.

"Entities could also better plan for staff displacement from damaged housing or physical injuries that could impede their employees’ ability to report for duty," the Central Bank found. "In particular, 70 percent of respondents lack provisions to respond to injuries or loss of housing among staff.

"Most supervised financial institutions reported plans to assist staff, such as with evacuation, setting up temporary housing, locating shelters, and access to medical care. Respondents also disclosed how they planned to ascertain the health and housing status of staff. All respondents have staff communications arrangements in place, with reliance on a mix of telephone calls, email and text messaging."

Still, the Central Bank added that "most supervised financial institutions need to think more holistically about staff impacts from a catastrophic storm, particularly staff who have lost housing access". It revealed it would ask industry bodies to develop a "code of practice" to deal with this issue.

"This includes in the first instance ensuring that employees can be contacted, and their welfare assessed. From that point, supervised financial institutions need plans in place to ensure that staff who are expected to work during the business continuity plan period have the housing, security and family arrangements in place to facilitate this availability," the regulator added.

"Staff who are not needed to work in the early BCP stages are nonetheless also necessary to preserve in as good order as possible, and to support operations recovery." And the Central Bank said the financial services industry's failure "to fully convert to near-universal digital contact with clients may prove a problem after a hurricane" when it came to reaching customers.

Suggesting that it planned to provide more guidance to Bahamian financial institutions on maintaining multiple channels of client communication, the regulator added: "In particular, 80 percent of respondents disclosed that they had more than one means to contact over three-quarters of their clients.

"This is noteworthy as many clients might also be displaced from their physical addresses after a Category Five hurricane. However, as to the reliability of electronic means of reaching customers, the results varied. Only 57 percent of supervised financial institutions confirm the electronic contact details of customers at least annually."

The survey, which issued 42 questions set against the impact of "catastrophic physical damage" resulting from a Category Five striking New Providence and Grand Bahama, received 94 responses from the 110 institutions targeted for a reply rate of 85 percent.

Responses were received from all the domestic commercial banks, four credit unions and five money transmission businesses. These institutions, which make up the domestic financial services industry, said they would be to restore digital banking channels within days of a Category Five strike.

"Faced with a Category 5 hurricane on New Providence, the domestic systemically important banks (DSIBs) and credit unions assessed that they would be able to restore phone and internet banking within a few days," the Central Bank said.

"As physical service channels could be significantly delayed, increased access to digital options throughout the population is essential. In particular, use of electronic payments systems could be enabled as soon as mobile phone service were restored. This could be a difference a few days rather than weeks or longer for physical systems to be repaired.

"Presuming retail banking buildings and ATMs were unavailable, each of the seven DSIB banks reported being able to provide retail clients with Internet, telephone or mobile banking. For the same question, three of the four credit unions offer Internet banking services and all four provided telephone or mobile banking services."

Overall, the Central Bank said the survey showed "a high confidence from supervised financial institutions in their ability to recover and operate in the aftermath of a catastrophic storm", although it was quick to acknowledge that more work needs to be done.

Asserting that this can proceed from a sound base, the regulator added: "Supervised financial institutions will need business continuity plans that contemplate the absence of access to damaged buildings for weeks to months.

"Resilience should also extend to information technology, telecommunications and electrical systems. Avoiding placement of critical infrastructure in basements of flood-exposed structures, for example, is a strategy worth consideration."