The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bank of the Bahamas executives yesterday pledged they would be “upfront” and detail “everything” about its future plans, amid suggestions there would be “fireworks” from disgruntled shareholders at tonight’s annual general meeting (AGM).

Paul McWeeney, the BISX-listed institution’s managing director, urged the bank’s 3,000-4,000 minority shareholders to give Board and management the breathing space necessary to turn the bank around.

“The whole idea is to be upfront and answer all questions as best we can,” Mr McWeeney told Tribune Business. “The plan is to really conduct the meeting in accordance with the agenda, and have a session at the end for questions and answers.

“It will give us a chance to say some things we may not have been able to say before. We have to move forward, and we will move forward.”

Mr McWeeney was speaking after multiple shareholders, speaking on condition of anonymity, pledged to Tribune Business that “there’s going to be fireworks” at tonight’s meeting.

The minority investors, who collectively own 35 per cent of Bank of the Bahamas’ total equity, are expected to give vent to their concerns and frustrations after the institution plunged to an-almost $69 million net loss for the 12 months to end-2014.

Just as troubling to several spoken to by Tribune Business is the manner in which Bank of the Bahamas slumped to such a net loss, after this newspaper exposed that the Central Bank had identified problems with its commercial loan portfolio and a host of regulatory, operational and systems control concerns some two years ago.

“It’s a systemic regulatory failure on the part of many people,” one shareholder, speaking on condition of anonymity, told Tribune Business.

Another investor added of tonight’s AGM: “They’re [Board and management] going to have their hands full. Standard and Poor’s (S&P) is even waiting for them to resolve this.

“I don’t know about this Bahamas Resolve thing. The taxpayers will have to pay this money back.”

Bahamian public company AGMs are normally relatively sedate affairs with little to trouble Board or management, but tonight’s Bank of the Bahamas variety promises to be anything but.

There is little prospect that any of the issues and resolutions, such as the appointment of the Board if Directors, the external auditors and ratification of various acts by the company will be successfully opposed or blocked, given that the Government (via the Treasury and National Insurance Board) controls a majority 65 per cent stake.

Several capital markets sources have suggested to Tribune Business that the minority shareholders, though, should collectively push for - and vote on -the appointment of several independent directors to the Board to protect their interest.

Mr McWeeney, meanwhile, pleaded for shareholders to join the public in supporting their investment, and aid Bank of the Bahamas’ turnaround.

“Let the public give us their support, and give the bank a chance to do its job,” he told Tribune Business. “People want change. Give us an opportunity to create the change they want to see.

“We’ll be making announcements about the bank’s future; everything about the future. The bank will grow from here, and we’ve learnt a lot from this.

“The bank will continue to move forward, simple as that. The bank is bigger than everything else here.”

Bank of the Bahamas is due to produce the results of a review into a Board and management restructuring by year-end. When asked by Tribune Business whether he would resign, as some minority shareholders are privately demanding, Mr McWeeney declined to comment.

Tribune Business understands that some Bank of the Bahamas executives and directors are looking forward to the AGM as an opportunity to present their case, believing that much of what has been made public to-date is ‘one-sided’.

There is also some resentment that the reaction to Bank of the Bahamas’ woes has been so sharp when almost every other Bahamian commercial bank has been subject to the same pressures, and booked similar loan loss provisions and losses.

FINCO continued this trend by announcing a $22 million writedown in its fourth quarter, a move that followed various restructuring and downsizing measures announced by all the Canadian banks, including CIBC FirstCaribbean’s $174 million net loss in the second quarter.

However, Bank of the Bahamas is the only institution to need a government-backed ‘bailout’, which saw $100 million worth of bad commercial loans transferred to Bahamas Resolve in exchange for government bonds.

And the December 2012 letter from Central Bank governor Wendy Craigg, which highlighted numerous regulatory concerns, will likely give shareholders much ammunition for questions tonight.

That letter, exposed by Tribune Business, slammed “all facets” of Bank of the Bahamas’ credit risk management processes” as “unsatisfactory”.

The confidential letter disclosed that a November 12-20, 2012, examination by Central Bank inspectors found “that a large measure of the basic tenets of industry sound credit practices are either missing, not evident, or compromised within” Bank of the Bahamas’ credit processes.