The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is moving to reconfigure the Board of BISX-listed Bank of the Bahamas International, whose annual general meeting (AGM) has been delayed by the wait for directors to be named.

Paul McWeeney, Bank of the Bahamas International’s managing director, confirmed the institution was waiting on its 65 per cent majority shareholder to ratify the Board of Directors - all of whom are appointed by the Government.

“We’re still waiting for something from the major shareholder,” he told Tribune Business. “That’s what we’re waiting on for the AGM - a letter from the major shareholder [the Government] advising on the directors.” Tribune Business was unable to contact Michael Halkitis, minister of state for finance, for comment.

Bank of the Bahamas International’s annual report for its 2013 financial year, which closed on June 30, 2013, was released last week. However, the bank cannot yet set a date for its 2013 AGM - which will now be held more than nine months after year-end - because without knowing the directors’ names, it is unable to issue the necessary ‘proxy’ documents to shareholders.

Shareholders have to vote on, and ratify, the appointment of all Board directors for the upcoming financial year as part of standard AGM protocol, although with the Government (via the Treasury and National Insurance Board) holding a combined 65 per cent stake, those nominated will not be seriously challenged.

Banking industry sources have told this newspaper, though, that the Government has been casting a wide net in its search for a new chairman and other appointees who would supplement the existing directors.

“There have been so many names out forward,” one banker told Tribune Business. “Various people have been approached in terms of the new chairman’s role, and new people have been approached to go on the Board to augment the existing directors.”

Bank of the Bahamas International’s current chairman is former auditor-general, Dr Richard Demeritte. Attorney Rawson McDonald is deputy chairman, and other directors are Quality Home Centre president Don Davis; McKinney, Bancroft & Hughes attorney and partner, John Wilson; NIB chairman Father James Moultrie; Bahama Grill Cafe owner Eric Gibson; attorneys Rodger Minnis and Donna Harding-Lee; Errol McKinney; and Bishop Roston Davis.

The Board changes are being contemplated as Bank of the Bahamas international, like all other commercial banks, grapples with deteriorating quality in its total loan portfolio. In the 15 months to end-September 2013, its ordinary shareholders have suffered a total $9.4 million net loss.

A 158 per cent increase in loan loss provisions pushed its ordinary shareholders into a $3.175 million net loss for the first quarter of its current 2014 financial year, the three months to end-September 2013. Bank of the Bahamas International is required to publish its figures for the second quarter, the period to end-December 2013, by today, and Mr McWeeney previously indicated that more ‘red ink’ was likely to be incurred.

As at June 30, 2013, Bank of the Bahamas International had 10,007 outstanding loans worth a collective $753.046 million. Some $118.926 million, or 16.18 per cent of the total, was then non-performing or 90 days at least past due.

However, data contained in the bank’s annual financials shows loan quality among its $469.08 million worth of ‘good credit’ significantly worsened between 2012 and 2013.

Credit deemed ‘satisfactory risk’ fell by more than 50 per cent, from $331.401 million to $152.436 million, while ‘watch list’ credit almost doubled - from $86.063 million to $170.218 million.

‘Sub-standard, but not impaired’ loans increased by a similar amount - from $75.84 million in 2012 to $146.427 million at 2013 year-end.

Bank of the Bahamas International has also been fighting a sustained tabloid newspaper campaign being waged against it, and has previously announced it is suing The Punch and its publisher for defamation.

The bank has responded previously to this campaign, which has alleged it gave out multi-million dollar, unsecured sums to politically-connected supporters of the Progressive Liberal Party (PLP) - much of which is in default.

Pointing out that it currently has close to $140 million in equity capital, Bank of the Bahamas International says its risk weighted capital ratio of 22 per cent is higher than the 14-17 per cent mandated by the Central Bank.

It dismissed allegations of political favouritism in the granting of loans as “simply untrue”, stating that all credit granted to “so-called political persons” occurred in 2008-2010, when the PLP party was not in power.

It added that any credit extended to them was “for bona fide commercial loans”, and described those that had attracted media scrutiny as “a very small fraction” of the total loan portfolio and “not in any way constituting a material risk” to the bank’s soundness.