The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Delinquent Bahamian borrowers were yesterday warned time is rapidly running out to restore their financial health with the country’s first-ever credit bureau set to issue its initial reports as early as May.

Kenrick Brathwaite, the Clearing Bank Association’s (CBA) chairman, told Tribune Business that the credit bureau expected to be in position to release its first assessments on individual borrowers by that date although an official “go live” timeline has yet to be confirmed.

“I think they expect they will be getting reports out, with sufficient data to get reports out, by May,” he said. While acknowledging that the various commercial banks are “at different stages” in their dealings with the credit bureau, particularly when it came to agreeing terms and conditions for the two-way information sharing between the parties, he added that there is little time for deadbeat borrowers to get straight.

“The message is you ought to get yourself in good condition financially,” Mr Braithwaite, also Bank of The Bahamas’ managing director, said. “This is going to push out over a period of time, but you’ll find those persons who have borrowed across multiple institutions, this will be significant for them. The percentage of those persons impacted will be significant.

“Those persons with good credit histories will be helped. Those persons who have not lived up to their commitments, and have a history of delinquency, those persons will find the impact will be significant.”

Mr Brathwaite added that the credit bureau’s reports and scores, drawing on information from multiple sources to assess a potential borrower’s risk and likelihood of default, would gain importance over time as more data and sources are added. 

He predicted that many banks will likely continue to rely on their own assessments for the credit bureau’s inaugural months as it builds-up data sources, with the industry increasingly switching to its reports as it adds information from utility companies, insurers, furniture and auto companies, payday lenders and hire purchase providers.

“The advantages are that the industry is going to be better able to assess the risk in terms of the customer,” Mr Brathwaite said. “If your risk is good, they may provide you with a loan at a reduced rate, but for those bad borrowers they may say the risk is too high and are not prepared to lend you the money.”

Uncertainty, though, remains over when the credit bureau will start issuing borrower reports. Gowon Bowe, Fidelity Bank (Bahamas) chief executive, suggested that year-end 2021 was a more realistic date for when its work will start to be used by the commercial banking industry given all the data provision and formatting issues that still have to be addressed.

The creation of a Bahamian credit bureau has been over a decade in the making, with the initiative first unveiled by the Central Bank in 2010. It has long been viewed as a vital “missing link” in The Bahamas’ credit architecture, with its absence depriving lenders of a centralised information repository they can draw on to better understand a borrower’s credit profile and risk of non-repayment.

Among those required to supply information to the credit bureau by the Credit Reporting Act will be commercial banks, insurance companies, credit unions, financial and corporate services providers, the Bahamas Mortgage Corporation and Bahamas Development Bank. Others likely to be added in the future are the utilities, auto dealers and furniture stores that extend credit to customers, and even the government’s revenue agencies.

The credit bureau will then compile and organise this information in a credit report provided to lenders, which will help them assess the risk provided by each loan applicant and reject those with poor histories.

John Rolle, the Central Bank’s governor, on Monday said the credit bureau was “not very far off” the preparation timelines set for the lead-up to its launch. “We are right at the border of going live,” he added, while conceding that more work is required.

Testing is being conducted on the borrower data supplied by Bahamian commercial banks “to make sure they have the right format”, and that no deficiencies and information gaps are occurring. The Governor added that “housekeeping and legal matters” between the credit bureau operator, CRIF SpA, and the banks relating to the agreement for the latter to supply data are also being addressed.

While Bahamians could currently get an indication of what their credit report scores may look like based on banking data alone, Mr Rolle said the likes of insurance companies, utility companies and money lenders will likely be given more time to submit the information required by the credit bureau.