The Tribune

• And warns further write-offs to come in 2023

• Minnis: My $12m loss estimate 'conservative'

• Cash, Data facility to break ground by June 30

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank yesterday revealed it has been forced to write-off almost $9m after the project to construct its new Royal Victoria Gardens headquarters was abandoned, with further impairment charges likely in 2023.

The banking sector regulator, in the financial statements attached to its just-released 2022 annual report, disclosed the extent of the immediate financial hit it has sustained as a result of not proceeding with a development where six years worth of work has effectively gone to waste.

Detailing the impact, note four in the financial statements on property, plant and equipment said: "The Bank’s ongoing construction of its new premises on the Royal Victoria Gardens (RVG) site located between East Street and Parliament Street, south of Shirley Street and north of East Hill Street in the city of Nassau, Bahamas, continued throughout the year.

"By resolution in Parliament, the Government of the Bahamas authorised the transfer of property to the Bank at a nominal cost of $10. The site preparation and demolition phase for the project began in 2020 and the architectural designs were completed.

"In March 2023, the Board of Directors approved the termination of the 'New premises project' and the transfer of the property ownership back to the Government. As a result, the Bank has recognised an impairment loss associated with this project totalling $8.92m as at year-end [2022]. Additionally, the Bank has estimated that additional termination fees will be recognised subsequent to year-end."

The Central Bank added that it "will explore alternative arrangements to meet its long-term accommodation needs", but the annual report's disclosures - that, in effect, $9m of the regulator's money has been wasted with further financial hits to come - will raise further questions as to why the project was abruptly abandoned and likely spark calls for greater explanation from both it and the Government.

John Rolle, the Central Bank's governor, has not responded to Tribune Business questions on the issue and has remained tight-lipped. No explanation is provided in the annual report, while for the Government, Michael Halkitis, minister of economic affairs, said it had suggested "the optics" of the project may not be the best so soon after COVID-19 and that other priorities should take precedence.

However, given the extent of the financial exposure already incurred, questions are likely to be raised as to why the project did not proceed given that the Central Bank was already so deeply invested. And the funding source was the Central Bank, and not Bahamian taxpayers via the Government, meaning the former was taking all the risk. It thus appears likely the Royal Victoria Gardens project was aborted at the Government's request for reasons that are not yet clear.

Dr Hubert Minnis, the former prime minister, yesterday reiterated his criticism of the Government's "ill-advised and poor decision" not to proceed and argued that his previous estimate that the Central Bank stands to lose a total $12m was "conservative".

"The Central Bank had already invested money. It was their money, not the Government's money, that was already allocated and budgeted for," he blasted. "That [the headquarters] was part of a plan for regeneration and redevelopment of the downtown area.

"They will lose more than $12m. I gave them a conservative figure. It will be more than $12m that the Central Bank will lose, and all because of the Government's poor and ill-advised decision. That's the Central Bank's money. The money has already been allocated. As a result of that poor and ill-advised decision, the Central Bank is poised to lose - I said $12m, but that's a conservative figure. They're poised to lose a lot more than that."

Dr Minnis reiterated his belief that the present Central Bank building on Frederick Street should be converted to museum. Among the artifacts it should display, he argued, are the gifts that successive prime ministers receive when they travel abroad on business for The Bahamas. Describing these as "gifts of state", the former prime minister said that when he was voted out in September 2021 he had nowhere to put them so left them at the Prime Minister's Office.

"You would have heard the cruise lines complain that there is nothing to do," Dr Minnis said. "The present Central Bank was supposed to be turned into a museum. When prime ministers travel abroad they are given gifts for the state, and there is nowhere to put them or leave them. The question is: What happens to gifts for the state? We could have allocated a space in there for gifts to be viewed by visitors and Bahamians."

The Central Bank, in previously announcing the end of its Royal Victoria Gardens headquarters project, detailed the amount of time that had been invested. "In 2017, the Government agreed to transfer the Royal Victoria Gardens to the Central Bank for development of its new headquarters building," it said.

“The transfer was approved by Parliament in 2019 and executed in 2022. In 2018, the Central Bank hosted a competition and selected a conceptual building design from Architecton Design Studios. The firm was subsequently contracted to provide the architectural services for the project."

Elsewhere, the Central Bank said it plans to break ground on its new Cash and Data Centre, which is to be located in southwest New Providence on Frank Watson Boulevard, before June 30 this year. "During 2020, the Bank completed the purchase of land which will be the future location for the Bank’s Cash and Data Centre," the financial statements said.

"In 2020, the accumulated costs were transferred to land and work in progress in the amount of $2.211m and $268,708, respectively, upon conveyance of the land title. The Bank anticipated that the initial phase of construction would commence near the end of 2021. However, this was rescheduled for late 2022.

"As at December 31, 2022, the Bank has outstanding contractual commitments on the Cash and Data Centre Project in the amount of $11,720 (2021: $396,549). The Bank anticipates ground-breaking prior to June 30, 2023, with completion within 24 months."