The Tribune

• Central Bank, EY accountant’s actions being challenged

• Lucayas being sold to Britannia, runner-up in PIB process

• Key Goodman’s Bay property at heart of regulatory dispute

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian bank’s sale has been confirmed by its statutory administrator despite his actions, and those of the Central Bank, being subject to a legal challenge that is ongoing before the Supreme Court.

Multiple questions have been raised over the fate of Lucayas Bank, the former Private Investment Bank (PIB), after Igal Wizman, the EY (Ernst & Young) accountant and partner appointed by the regulator, informed its clients that their assets have been sold to fellow Bahamas-based institution, Britannia Bank & Trust.

Documents obtained by Tribune Business reveal that the sales agreement with Britannia was concluded on April 29, 2022, with the transfer of client assets to Britannia beginning on May 6, even though Lucayas Bank’s now-former owners have applied for Supreme Court permission to bring a Judicial Review action challenging both the Central Bank’s decision to appoint Mr Wizman and their subsequent actions.

Well-placed sources yesterday suggested that a Supreme Court ruling on their application, which is being opposed by both the Central Bank and Attorney General’s Office, is now awaited but any decision in the owners’ favour could have effectively been rendered moot given that the sale of Lucayas Bank’s assets under management has already occurred.

Tribune Business last year questioned why the Central Bank, having approved the acquisition of PIB by the former owners just eight-nine months previously, suddenly performed an abrupt u-turn by appointing Mr Wizman as statutory administrator of the renamed Lucayas Bank on October 27, 2021.

No explanation has been forthcoming, and the timing of a document’s tabling in the House of Assembly yesterday has raised further questions. A notice laid by the Prime Minister revealed that Clifford Culmer, the BDO Bahamas accountant and partner, had been appointed by the Central Bank as an “independent valuer” of Lucayas Bank’s assets with effect from April 4, 2022.

The notice was itself dated May 17, 2022, and multiple contacts - speaking on condition of anonymity because all those connected to the Lucayas Bank situation are said to have been “gagged” - questioned why Mr Culmer’s appointment was only being made known now, some six to seven weeks after it took effect, and also some two-three weeks after the sale to Britannia and the transfer of client assets to the latter.

At the heart of Lucayas Bank’s woes is the Goodman’s Bay-based property, Fairview, which it owns. This newspaper was told it carries up to a $15m valuation, more than double the existing price, just based on plans to redevelop the near two-acre site into a tourism-driven property or condo hotel such as the GoldWynn project next door.

Tribune Business understands that the bank’s now-former owners, via a separate company, had also sealed an agreement with the former Minnis administration to purchase the adjacent La Playa property from the Government. Putting that together with Fairview, this newspaper was told, would result in a development parcel worth $80m “net of value”. Paul Wynn, GoldWynn’s principal developer, has made no secret of his desire to acquire La Playa

However, as revealed by this newspaper previously, the Central Bank was unhappy with the inclusion of Fairview among Lucayas Bank’s assets and regulatory capital. It mandated that the new owners sell the property, located opposite the Prime Minister’s Office, within a tight seven to ten-day deadline that they felt was impossible to comply with. When this failed to happen, the regulator appointed Mr Wizman.

“The principals were very upset by that,” one source familiar with developments said yesterday. “I think they felt the Central Bank might have reacted a bit too quickly in that they gave them one week to dispose of the property and produce the necessary capital to allow them to be within the capital requirements.

“The former owners were told by the Central Bank that they couldn’t use Fairview as part of the bank’s capital. The question is: Can you sell a property in a week? You cannot sell a bicycle in Nassau within seven to ten days.” The source said the speed at which the Central Bank appointed Mr Wizman, having just approved the then-owners’ purchase of PIB some eight-nine months prior, raised questions about the quality of the regulator’s due diligence.

Another source, backing this explanation, told Tribune Business that the Central Bank effectively demanded that the new owners “take the real estate assets out of the bank after they had approved the valuation of the bank based on the real estate assets. Then they turned around and said the bank cannot be in the business of real estate. What bank on planet Earth doesn’t have a book backed up by real estate?”

John Rolle, the Central Bank’s governor, declined to provide details or respond to most Tribune Business questions on Lucayas Bank situation. “Specific to this entire incident we have to let the work continue without any prejudice to it,” he said, alluding to the ongoing Supreme Court legal battle.

However, letters sent by Mr Wizman to Lucayas Bank clients, and obtained by this newspaper, confirm the sale to Britannia and the transfer of their deposits and assets to the latter. Tribune Business understands that Britannia had sought to acquire the bank when it was still PIB, but was beaten out into second place by Lucayas Bank’s now former owners.

“Further to my letter dated April 13, 2022, we continue to work toward concluding the sales process and, to this effect, are pleased to announce the asset purchase agreement (APA) was executed on April 29, 2022,” Mr Wizman told clients in a May 2, 2022, letter.

“Transfer of the bank’s assets under management to the purchaser will commence at closing and, as a result, trading of securities will be suspended temporarily for five business days before closing. Once the assets under management transfer has been completed, trading will resume.

“We are working towards an expedited closing and anticipate closing before May 16, 2022. Please note that on the closing date the purchaser will be assuming liability for the transferred assets under management and you will be deemed to have accepted the transfer of your assets to the purchaser at this time,” the EY accountant continued.

“I can confirm that the bank’s assets under management portfolio has been sold to Britannia Bank & Trust, the origins of which in The Bahamas date back to 1997.” Research by Tribune Business confirmed Mr Wizman’s description of Britannia as part of a London-headquartered financial services group, participating in the wealth management, securities and investment funds sectors.

“The sale of the bank’s assets under management portfolio has been carried out in accordance with a process approved and overseen by the Central Bank of The Bahamas, and continues to be in the best interest of its customers and stakeholders,” the EY partner asserted.

In a follow-up letter on May 9, 2022, Mr Wizman attached a “welcome letter” to Lucayas Bank clients from Britannia, and added: “The transfer of customers’ assets to Britannia commenced upon closing on May 6, 2022.” However, not all are impressed that the sale and asset transfer have apparently closed.

“The Central Bank has gone ahead and approved the sale to Britannia even though the entire sale is in dispute; the actions of the statutory administrator are under dispute in the courts,” one well-placed source said yesterday, questioning the message that the Lucayas Bank situation is sending to investors and financial institutions at a time when The Bahamas is seeking to establish itself as a digital assets hub. “There’s probably a lot of negative impact on the client base.”

Simone Morgan-Gomez, the Callenders & Co attorney and partner, is understood to be representing Old Church Financial Investments, the vehicle used by Lucayas Bank’s former owners to hold their interest. Meanwhile, the source queried why Mr Culmer’s appointment was only being made known now - after the sale closing and client assets transfer - despite the legal requirement for the Central Bank to announce it. 

The Banks and Trust Companies Regulation Act 2020 mandates that such a “valuer” be appointed if a Central Bank statutory administrator decides to sell one of its licensees or their assets to ensure that the sum paid by the purchaser is fair and sufficient. Mr Rolle confirmed: “It is a part of the legal process of making certain everything is conducted properly throughout.

Yet the source added: “You can’t retroactively give notice that you’ve appointed this man in April. They’re trying to back-date this ahead of the announcement of the sale to Britannia.”

All this is a far cry from when Lucayas Bank’s new owners unveiled plans on March 11, 2021, to expand its assets under administration to $1.5bn within two years. They added that they were already eyeing a tourism industry investment that could create “at least 75 full-time jobs” separate from the 24 staff it has inherited with the PIB deal.

The Lucayas Group declined to reveal much about the identity of its major or controlling shareholders, only saying that its various companies have been operating for up to 20 years and the principal stakeholder is “an Anglo-Irish and American family trust with other individuals holding minority stakes”.