The Bank of The Bahamas, ever mindful of its confidentiality obligations to its customers under Bahamian law, has avoided commenting on various stories that have appeared in certain quarters of the local media in recent times. Unfortunately, these stories have presented a highly distorted, incomplete and inaccurate picture of the true facts. The Bank feels, therefore, that it needs to set the record straight as far as possible so that its customers, 4000 shareholders anchored by its majority shareholder, the Government of The Bahamas, and the general public can have every assurance that the Bank continues to operate in a sound and prudent fashion. In setting the record straight, however, the Bank will continue to observe the standards of confidentiality expected of it.

  1. Firstly, the Bank is robustly capitalized exceeding Central Bank requirements and international banking norms. Through a combination of profit retention and preference share issuances, the Bank grew its total equity from $17 million to its present level of $140 million. With this level of capital, the Bank has a risk weighted capital ratio of almost 22% which is consistent with the averages of other clearing banks and well above the range of 14% – 17% required by the Central Bank of the Bahamas.
  2. Over the years the Bank has set aside, as part of its normal risk management process, almost $40 million against the potential of not being able to realize on the security held against bad loans. These provisions coupled with our capital adequacy place the bank in a sound and solid position to weather the setbacks which virtually all banks in The Bahamas, including ours, have had to deal with as a result of recessionary conditions in the economy. Thus, there should be no concern over the Bank’s ability to manage its losses. It can more than comfortably do so. Indeed, BOB, in common with all banks, is closely monitored by the Central Bank to ensure that provisions for loan losses are adequately covered.
  3. Recent media reports suggesting political favouritism or political involvement in the granting of loans are again simply untrue. Successive governments, to their credit, have systematically avoided any involvement in credit policies or the granting of credit. Further, virtually all of the loans involving so-called political persons that have been the subject of recent stories in the media were made in the period 2008-2010 when these persons were not even in government. Indeed since 2011 there have been very few new commercial relationships established at all, the Bank having decided instead to concentrate on potentially more profitable areas of the retail banking market. The time periods just mentioned are significant therefore in dispelling the idea that politics played a role in the granting of loans. That was not true of the government that was in power in the periods just mentioned, nor is it true for the government in power now. Governments and political personalities have always stayed out of the running of the Bank of The Bahamas. Indeed that has been a major part of the Bank’s success.
  4. The loans to such persons were not personal loans but rather commercial loans in which certain political figures may have been interested as investors or shareholders. These are loans granted for bona fide commercial purposes and were, moreover, well collateralized so that in the event of default the Bank would be able to recover its losses.
  5. BOB registered its first loss last year, a loss of 3.5 million, after 20 consecutive years of profitability. In this regard, however, the Bank’s experience was hardly unique. Indeed another clearing bank just recently posted a sizeable loss for the same period – again the first loss of its kind. Others, it should be remembered recorded losses in recent years. The point is that these are challenging times for banks in The Bahamas. However, the Bank of The Bahamas, in common with all the other clearing banks, has pro-actively taken the necessary steps to ensure that it is robustly positioned to deal with the challenges that we all currently face.
  6. BOB conducts its business in accordance with well regulated banking principles and standards. Recent media reports suggesting excessive unsecured lending practices are simply untrue. In virtually all cases, our loans are more than adequately secured.
  7. In any event, the loans in question, although not accurately reported, represent a very small fraction of the Bank’s overall loan portfolio and do not in any way constitute a material risk to the overall health and soundness of The Bank of The Bahamas.
  8. Further, in common with the other clearing banks, BOB has stepped up its debt collection and enforcement strategies. As a result, the Bank is now experiencing positive signs in loan recoveries – this, in spite of current economic conditions in the country.
  9. In recent years, the Bank has introduced a range of initiatives aimed at reducing risk and cutting costs, including, as mentioned, a temporary curtailment of participation in the commercial loans market. Of particular note, unlike some other clearing banks that have been obliged to make significant reductions in staffing levels, the Bank of The Bahamas is proud of the fact that it has been able to achieve cost-saving efficiencies without having to lay off any of its staff.
  10. BOB has achieved tremendous success over the years and is well poised for a return to profitability. Since its inception in 1989 its assets have grown from $93 million to almost $900 million presently. It earned cumulative net income of almost $100 million and consistently paid dividends totaling over $50 million since first going public in 1994 up until 2012. Moreover, stocks that were originally sold at $2.00 and $2.50 appreciated in value to as high as $9.60 and have consistently maintained a value well in excess of the original sales price. As a result, the almost 4,000 shareholders would have benefited from significant earnings over the last 20 or so years. In fact, BOB’s major shareholder, the Government of The Bahamas, has earned an annual rate of return of 24% over each of the last 20 years on its original investment in the Bank. The Bank is confident that this history of profitability will resume as the economy improves and employment increases with the opening of Baha Mar and other important projects later this year.
  11. As for leakage of confidential banking information, including names of customers, this would involve the commission of a criminal offence under both the Banks and Trust Companies Act and the Data Protection Act. The Bank has therefore called in the appropriate authorities, including the Police, to determine if and how the breach occurred, and the person(s) responsible for it. The stance of the leadership of the Bank is to take carefully considered but unequivocal action against all actors who have acted in concert to hurt its fine reputation. Thereafter the law will be allowed to take its course. In the meantime internal steps have been taken to guard against any future breaches.

In conclusion, the Bank’s customers, shareholders and the general public can continue to rest assured that the Bank of The Bahamas is sound and stable, and primed for an early return to profitability through the efforts of the almost 400 committed and dedicated members of staff under sound and determined leadership of our capable management team.