The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government yesterday pledged to ensure minority investors are represented on Bank of the Bahamas' Board, as it urgently explores options for a multi-million dollar recapitalisation of the troubled institution.

K P Turnquest, the Minister of Finance, confirmed to Tribune Business that the Government is also hastily moving to organise an annual general meeting (AGM) for the 2016 financial year before end-June 2017.

Suggesting that BISX-listed Bank of the Bahamas (BOB) has just over a month left to comply with capital markets regulations regarding the holding of AGMs, Mr Turnquest said the Government would use the meeting to obtain "a mandate" from all shareholders - including the 21 per cent minority.

He added that the Minnis administration would follow through on promises, made under its predecessor, to appoint two independent directors to BOB's Board to represent minority shareholder interests.

"We are in the process of organising for the AGM. It has to be held before the end of June, and we'll try and get it done as quickly as possible," Mr Turnquest told Tribune Business.

"The first thing is to put in place a Board and get a mandate from the shareholders, and then engage upon a restructuring exercise to put the bank on the proper path."

The Minister of Finance added that the Government also intended to pick up on "the movement for minority shareholder representation on the Board" - a development begun, but never completed, under the Christie government.

Mr Turnquest declined to "confirm or deny" whether Wayne Aranha, the former PricewaterhouseCoopers (PwC) accountant, and ex-Scotiabank chairman, Anthony Allen, have been selected as BOB's chairman and deputy chairman, respectively.

"We have the key persons," he confirmed. "The investment community and depositors will be happy with the selection."

Tribune Business sources yesterday disclosed that recapitalising Bank of the Bahamas, in a bid to end its drain on Bahamian taxpayers and put the institution on a solvent footing, is among the Minnis administration's top priorities.

The Government is understood to be exploring all options, including bond and equity issues, to achieve this goal. Mr Turnquest declined to comment on this yesterday, but did confirm that whatever the Government did would be designed to keep any liabilities off its balance sheet and from adding to the $7 billion-plus national debt.

The Government owns 79 per cent of BOB via the Public Treasury and National Insurance Board (NIB), and the possibility remains that taxpayers could yet be called upon to contribute further to the bank's rescue.

The Government, under the former Christie administration, financed the initial BOB 'bail out' in October 2014 via a 'bonds for loans' swap, whereby a net $45.2 million in 'bad' loans were taken off the bank's balance sheet in exchange for a $100 million promissory note.

The liability associated with those loans, and responsibility for collecting them, was transferred to Bahamian taxpayers. This 'bail out' was followed last year by the Government taking up BOB's entire $40 million rights issue, and investing a further $10 million in the bank's contingent convertible bond issue.

Tribune Business exclusively revealed earlier this month that Bank of the Bahamas is seeking the Supreme Court's protection from the Central Bank's regulatory demands, which involve an "immediate" $50 million increase in its loan loss provisions and legal action against "politically exposed" bad borrowers.

The Central Bank also wants BOB to convert its $10 million in contingent convertible bonds to common equity Tier 1 capital, with "all future capital injections.... paid in cash and constituting common equity Tier 1 capital".

Bank of the Bahamas is resisting the $50 million provisioning, and $10 million convertible bonds, demands, which resulted in the Central Bank levying a $100,000 fine for non-compliance with its supervisory requirements.

The demands being resisted by BOB would almost certainly require the Government to inject more capital into BOB, beyond the $170 million directly committed and over $300 million in deposits.