The Tribune

Bank of the Bahamas’ (BOB) managing director yesterday pledged to “leave no stone unturned” in returning to sustainable profitability, although few specifics were provided on a “transformation” exercise said to have been underway since January 2016.

Wayde Christie, in a statement released yesterday afternoon, hinted that the BISX-listed bank may downsize to achieve its goal of becoming “leaner, faster, better”, following three consecutive years of heavy losses that prompted a $100 million Government ‘bail out’.

Mr Christie said Bank of the Bahamas’ so-called ‘transformation team’ had $3.5 million in recovered assets in hand, or under contract, since their appointment in January.

He added that troubled loans were being renegotiated, with Bank of the Bahamas also introducing new corporate governance policies and a new, more conservative approach to lending.

Mr Christie also acknowledged that Bank of the Bahamas needed to improve its capitalisation and address liquidity concerns, adding that it was also looking to more Government business to help extract it from the fire.

“We have been, and continue to examine and assess, the policies and procedures of this bank from one end of the spectrum to the other,” said Mr Christie. “We are leaving no stone unturned.

“We can no longer be all things to all people. For more than two decades, Bank of the Bahamas was the bank that Bahamian business turned to. We can take pride in having backed a number of businesses that now play an important role in our economy, but in order for BOB to achieve financial stability and sustainability, we must look at ourselves differently in the future as a bank that will be around for a very long time, financially sound and successful.”

Mr Christie said Bank of the Bahamas would seek to shed illiquid assets, and increase government and private sector deposits, to boost its liquidity.

Hinting that this might involve some downsizing, he implied that this would largely be achieved by so-called ‘natural attrition’ - not replacing staff when they left.

“We need to alleviate liquidity concerns and continue to offload illiquid assets, increase government and private deposits,” Mr Christie said in his statement.

“That will involve some restructuring, and that could include some natural attrition. There will be emphasis on ownership, accountability and profitability.

“We will continue to bolster our capital position by accelerating the resolution of impaired assets, embarking on a safe growth path and enhancing our organisational health. Ultimately, we will return to our core vision to be the best and most respected Bahamian financial enterprise.”

Bank of the Bahamas’ 35 per cent minority shareholders, though, are likely to be distinctly unimpressed by the lack of detail contained in yesterday’s statement on how the company they have invested in will return to profitability.

While Mr Christie’s statement lists several objectives, it is relatively short on the ‘how’ - how they will be achieved, and any targets and timelines for returning to profitability.

Bank of the Bahamas promised that it would disclose its restructuring plan to shareholders at its last annual general meeting (AGM), held in December 2014, but this is yet to occur. It is unclear if Mr Christie’s statement yesterday is intended to be that plan.

Tribune Business reported in February how long-suffering Bank of the Bahamas shareholders incurred a further $3.392 million loss during the final three months of 2015, with the institution still non-compliant with key capital ratios.

The BISX-listed institution, unveiling its second quarter and half-year results for the 12 months to end-June 2016, again blamed ‘bad’ loan provisions for losses that now exceed its 2014 ‘bail out’ write-back by almost $20 million.

Bank of the Bahamas has been in non-compliance with two key capital ratios for at least six months, with the breaches dating back to at least its end-June 2015 financial year close.

Its results for the six months to end-December 2015 reveal that the bank’s Tier 1 Capital, as a percentage of total risk weighted assets, now stands at 10.95 per cent compared to the 12.8 per cent minimum.

This represents a further decline from the 11.06 per cent at end-June 2015. The other problem ratio continues to be Tier 1 capital as a percentage of total capital, which is now at 63.45 per cent compared to the minimum 75 per cent.

The only ‘crumbs of comfort’ for Bank of the Bahamas’ 3,000 minority shareholders were the fact that the bank’s losses seem to be declining in size.

The fiscal 2016 second quarter loss for ordinary shareholders was down by 40.5 per cent, from $5.697 million to $3.392 million, while the half-year’s ‘red ink’ declined by 62 per cent - from $9.895 million to $3.751 million.

The second quarter results, covering the three months to end-December 2015, provided the first ‘true’ year-over-year comparatives of Bank of the Bahamas’ performance since the $100 million Bahamas Resolve ‘bail out’ on October 31, 2014.

“Everything we do is aimed at being leaner, faster, better with long-term value and sustainability,” said Mr Christie yesterday.

“Our ability to consistently provide an exemplary level of service to our internal and external customers is also a strong area of focus and commitment. Going forward, these themes will underpin our activities as we build and maintain winning relationships.

“As we lay the framework for the Bahamian bank of solutions, we will be laser-focused on improving our financial performance and rigorously holding ourselves accountable for delivering results as quickly as possible. Our goal is to provide the best in service while achieving satisfactory shareholder returns, with higher stability levels and greater minority shareholder participation.”