The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bank of the Bahamas was yesterday slammed for its latest failure to make timely disclosure to shareholders, having failed to provide the market with the outcome of its $40 million rights issue since it closed two months ago.

The troubled BISX-listed institution, which is thought to have lost more than $120 million over its past three financial years, is also late in filing its annual statements.

Given that its financial year-end is end-June 30, Bank of the Bahamas is supposed to file and publish its audited financial statements by October 31 each year - a date that is 120 days post year-end, in compliance with BISX’s rules.

But the commercial bank, which is majority-owned by the Government, has both failed to do this or publish any notice confirming that it has received an extension from the stock exchange for the publication of its audited financials.

Holland Grant, BISX’s chief operating officer, declined to go into specifics, but hinted that Bank of the Bahamas should be making material public filings soon.

“The issuer is required to make a disclosure, and you should be seeing something shortly,” he told Tribune Business.

“You should be seeing something shortly on all material matters related to the company shortly. We enforce our rules.”

This implies that BISX, and possibly the Securities Commission as well, have been in talks with Bank of the Bahamas about both the publication of its annual financial statements and the rights issue’s outcome.

Both are material events that shareholders have a right to obtain full information on in a timely manner. While the financial statements enable investors to assess how their investment is performing, the rights issue is likely to have significantly diluted their stake in Bank of the Bahamas.

Given that few of the 35 per cent minority investors have elected to exercise their rights and subscribe for more shares, the Government shareholders - the National Insurance Board (NIB) and the Treasury - will likely have been forced to take up most of the $40 million. This, in turn, will have raised the Government’s equity stake in the bank to 80-90 per cent.

Bank of the Bahamas’ executive chairman, Richard Demeritte, did not return Tribune Business calls seeking comment.

However, Mike Lightbourn, Coldwell Banker Lightbourn Realty’s president, and one of Bank of the Bahamas’ more vocal minority shareholders, argued that the institution was not “held to the same standard” as other banks and public companies because it was government owned.

He called on Prime Minister Perry Christie, who has ultimate responsibility for Bank of the Bahamas as minister of finance, to “put his foot down” and insist that it follow typical public company disclosure processes.

“I’m not surprised,” Mr Lightbourn told Tribune Business about the lack of disclosure. “They have no clue what they’re doing, and the Government seems to be allowing them to get away with it.

“They’re not held to the same standard as a regular bank, and do what they want; nobody seems to care. What I’m concerned with is the Central Bank. They seem to be totally ignoring it. They’re supposed to be independent of government, but since it’s a government bank.........”

Mr Lightbourn said Bank of the Bahamas seemed to be ignoring its minority shareholders, and added: “Isn’t Perry Christie, as Minister of Finance, responsible for this?

“Isn’t that where this falls? He himself should put his foot down and insist the bank follow the proper procedures. Based on his track record, I’m not surprised at the lack of follow up.”

Describing the situation as “a disgrace”, Mr Lightbourn told Tribune Business: “I don’t know of any other bank, any other publicly traded company, in any part of the world, where they are supposed to be accountable for their actions, to get away with this.”

Shareholders have some idea of what to expect for the year to end-June 2016, given that Bank of the Bahamas produced unaudited financials, showing it suffered another $24 million loss, in the documents accompanying the $40 million rights issue.

The prospectus for the rights offering, which aimed to recapitalise the bank and end non-compliance with the Central Bank of the Bahamas’ regulatory requirements, indicated that little progress has been made in stemming the financial bleeding.

Unaudited figures for the 12 months to end-June 2016 showed that net losses at Bank of the Bahamas declined by 21.2 per cent year-over-year, falling from $30.397 million to $23.951 million.

The main reason for the near-$6.5 million improvement was a 37 per cent rise in the bank’s total operating income, which increased from $6.785 million in 2015 to $9.289 million.

This, in turn, was driven by a $1.6 million jump in net fee and commission income to $5.23 million. However, Bank of the Bahamas continues to be weighed down the by poor quality of a large segment of its loan portfolio.

Loan loss provisions associated with ‘bad loans’ remained relatively flat year-over-year at $24.5 million, down slightly from $26.124 million the year before, indicating that more troubled credit needs to be removed from Bank of the Bahamas’ balance sheet if it is to properly recover.

The BISX-listed institution’s balance sheet for end-June 2016 again showed that it would be insolvent, with liabilities exceeding assets, were it not for the $100 million worth of bonds injected into it as part of the October 2014 ‘bail out’.

And, with the bank having suffered a collective $120.682 million net loss over the past three years, the $54.622 million retained earnings ‘write back’ produced by the ‘bail out’ has been eliminated by a $59.549 million accumulated deficit.

Bank of the Bahamas’ net equity also slid, dropping by almost one-third to close June 2016 at $63.545 million, down from $90.786 million the year before.