The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank of The Bahamas has suspended the granting of all exchange control approvals for the payment of dividends by the Canadian-owned commercial banks to their foreign parent.

The move, which took "immediate effect" from March, will impact Royal Bank of Canada (RBC), BISX-listed CIBC FirstCaribbean International Bank, and Scotiabank as the Central Bank seemingly moves to safeguard The Bahamas' foreign currency reserves.

"In light of the COVID-19 pandemic and its expected negative impact on the Bahamian economy, the Central Bank has suspended - with immediate effect from March 2020 - all exchange control approvals for domestic bank dividends. This position will be periodically reviewed, with a view to determining a medium- term position by September 2020," the regulator said in its COVID-19 response guidelines.

John Rolle, the Central Bank's governor, did not respond to e-mailed questions sent by Tribune Business before press time last night. However, the prohibition on dividend payments by the foreign-owned banks to Caribbean and global headquarters could save millions of dollars in foreign exchange at a time when The Bahamas needs every cent it can get.

The foreign currency reserves, which ultimately support the fixed exchange rate regime and one:one peg with the US dollar, are already projected to fall by $1bn during 2020 - effectively reducing them by 50 percent from their $2bn level at end-February 2020 with no tourism or other inflows coming in.

Mr Rolle previously denied that restrictions limiting money transmission businesses to the conduct of domestic transactions only was intended to help safeguard the foreign reserves.

"The Central Bank takes a holistic approach to managing access to foreign exchange markets. Commercial banks are the conduits for foreign exchange passing through our financial system, including the supplies flowing through MTBs. The flexibility given to commercial banks, which has not changed, determines the access that all persons and businesses enjoy to foreign exchange," he said then.

The Central Bank's guidelines, meanwhile, also ease the requirements for its bank and trust company licensees when it comes to the end-April 2020 deadline for filing their audited 2019 financial statements, with "reasonable" requests for extensions considered without the impositions of penalties.