COUNTRY PROFILE
Total land area.....................: 10,070 sq. km.
Official language:.................... English
Administrative divisions.........: 21 districts
Legal system.........................: Based on English Common Law
Executive branch...................: Chief of State English Hereditary Monarch, represented by
governor general. Head of government‹prime minister,
deputy prime minister appointed by governor general.
Cabinet‹appointed by governor general on prime minister's
recommendation.
Legislative branch..................: Bicameral Parliament‹Senate (16 members appointed by
governor general) and House of Assembly (40 members
elected by the populace).
Judicial branch.......................: Supreme Court.
ECONOMIC PROFILE
Currency: Bahamian dollar (B$)
GDP: US$3.3 billion (1997)
Real GDP growth (at market prices): 3.5 (1997)
GDP (average annual growth rate): 1.0 (1988-1997)
GDP per capita (1990 US$): 11,694.2 (1997)
Consumer price index (average annual growth rate): 0.5% (1997)
Central government fiscal balance (% of GDP): -2.8 (1997)
Money supply (M1) (% of GDP): 12.5 (1997)
Interest rate (average of nominal rates quoted by
commercial banks for three-month time deposits): 5.3 (1997p)
Current account balance: -US$325.6 million (1997)
Trade balance: -US$1 billion (1997)
Main commodity exports: Pharmaceuticals, cement, rum, crawfish, refined petroleum
products.
Main commodity imports: Foodstuffs, manufactured goods, crude oil, vehicles, electronics.
Nominal exchange rate (B$/US$): 1.0 (1-1998)
Real effective exchange rate (Index 1990=100): 99.0 (1997)
BANKING SYSTEM
Total number of banks in the system: 415 (as of June 30, 1998)
Types of banks: Banks and trust companies.
Total amount of assets: US$245 billion (approximately)
Total amount of deposits: US$200 billion (approximately)
Total amount of capital or net worth: Not available.
BANKING INSTITUTIONS
I. Banking Supervision
1. The Central Bank of the Bahamas is the primary supervisor of the banking system.
2. The Central Bank is an independent government agency.
3. The Central Bank does not report directly to another branch of the government.
4. All licensees are subject to off-site examinations and monitoring. The Bahamas
does not routinely undertake on-site inspections. When necessary, on-site
inspections are commissioned to reputable accounting firms, using defined terms
of reference covering specific aspects and/or overall conditions of a bank's
operations.
5. The Bahamas has an ongoing system of tracking the financial condition of
licensees through critical assessments of quarterly financial statements
(including income statements), prudential returns, annual audited financial
statements, fund flow statements, and disaggregated and/or supplementary
data. In specific cases, where warranted, on-site inspections are conducted.
6. Bank examinations use systems such as CAMEL and ROCA.II. Consolidated Supervision
1. The home country is capable of performing consolidated supervision. The Central
Bank of the Bahamas subscribes to the principles of the Basle Concordat,
including consolidated supervision and cross-border banking.
2. Prior consent to open or close a banking establishment in a foreign country is not
applicable.
3. Prior consent to open or close a foreign banking establishment in the Bahamas is
not applicable.
4. Within the framework of existing legislation, the Central Bank cooperates with
foreign-country supervisors in the exchange of supervisory information for
consolidated supervision. Under the terms of The Banks and Trust Companies
Regulation Act, which deals with seeking and divulging confidential information,
it would be an offense for a licensee to report the names of individual customers to
the home supervisor without the customers¹ explicit consent. Such restrictions,
however, do not prevent information exchange between the Bahamian branch or
subsidiary providing that the identity of the customer is not disclosed. Further,
internal auditors from the parent bank or head office are entitled to inspect the
books of Bahamian entities. They are permitted access to all information relating
to banks' activities, including the names of individual depositors and borrowers.
Where there is prima facie evidence of criminal activity, information may be
divulged according to Bahamian secrecy legislation.III. Interest Rates
1. Interest rates on loans are determined by the market.
2. Interest rates on deposits are determined by the market.IV. Insurance on Deposits
1. The Bahamas does not have deposit insurance. However, the government is
considering a Draft Bill providing for the creation of a deposit insurance agency.
2. Insurance limits are not applicable.V. Trade Finance
1. Trade finance is defined as the intermediary structuring and financing of letters
of credit, discounting of bankers¹ acceptances, pre-export financing, forfeiting,
commodity financing and foreign receivables.
2. All risks associated with trade financing activities are borne by the institutions
conducting the same.
3. Bank liquidations are usually supervised by the courts and are carried out by
the entity¹s external auditors. The Central Bank does not play any other role
except to monitor the proceedings via liquidation reports submitted for its perusal
by the liquidators. The liquidators are charged by the courts to settle the liabilities
and (if available) disburse remaining sums to shareholders.
4. Only those institutions that have claims on a bank in liquidation would likely make
provisions for possible losses on such amounts as may be exposed. The Bahamas
does not currently have a deposit insurance scheme. The government is currently
considering implementation of a deposit insurance program, but it is not expected
to address trade finance provisions/reserves.VI. Capital Adequacy
1. The following are minimum capital requirements for licenses:Public Categories
Bank only: $1 million Bank & trust: $1 million Trust only: $1 million
Restricted Categories
Bank only: $100,000 Bank & trust: $100,000 Trust only: $100,000
Nominee trust: $10,000
Non-Active Categories
No minimum capital requirement is stipulated.2. Locally incorporated banks or subsidiaries of international banks are required to
maintain a capital position equivalent to 8% of risk assets or 5% of total assets
(including off-balance sheet items), whichever is greater. In the case of international
bank branches, no assigned capital is prescribed and solvency ratios of parent
banks are relied upon for requisite support to branch operations.
3. Capital adequacy is measured as follows:Category Ratio
Well-capitalized Above minimum
Adequately capitalized 5% gearing or 8% risk assets
Inadequately capitalized Below minimum levelVII. Asset Quality
1. No rating system is used for monitoring asset quality. Monitoring is accomplished
through annual independent audits. Ordinarily, all nonperforming loans classified
as nonaccrual accounts must have adequate reserves. However, where provisions
are not made in such accounts, adequy of security and/or resources of the
borrower are ascertained and discussed with senior management and auditors
if considered necessary. If the provision policy or levels are found
inadequate, restrictions are placed on payment of dividends. The increase
of equity in a phased manner will also be required.
2.Compared month to month, a bank¹s liquid assets are on average not less than
that percentage of the amount of its deposit liabilities at any time fixed by the
Central Bank. As a general rule, the fixed percentage shall not be less than 10%
nor more than 30%. Different percentages may be fixed for different classes of
commercial banks. Banking laws stipulate that percentages in force may not be
increased by more than 5% in any 30-day period. Reserves are defined as the
percentage of total assets as a liquidity ratio, or liquid assets as a percentage of
deposits. Banks are expected to maintain general provisions of at least 1.5% of
their loan portfolio, in addition to specific provisions where warranted.
3. A bank should not lend more than 25% of its capital to any one customer
(including connected groups of borrowers treated as a single risk). Lending to
companies or persons connected with the bank or banking group should not
exceed 10-15% of the bank¹s capital. The Bahamas prescribes a level of
concentration in the loan portfolio by establishing that lending to particular sectors,
such as real estate, shipping and agriculture, should not exceed 10 to 15% of a
bank's total loan portfolio. Ceilings are flexible on a case- by-case basis.
The Central Bank subscribes to the principles of the Basle Concordat, as
recommended by the world¹s leading policy-making body on banking supervision
practices, the Basle Committee. Investment in equity of a single issuer (including
affiliates) is not to exceed 10% of capital.
4. For the treatment of investments, the Bahamas applies disclosure criteria (as
per international accounting standards) which are accepted standards utilized by
external auditors.
5. Investment categories follow international accounting standards.
6. Valuation of the investment portfolio affects the profit and loss statement
according to international accounting principles.VIII. Liabilities
1. Every commercial bank must establish and maintain statutory reserves of not less
than that percentage of the amount of its deposit liabilities (in Bahamian dollars)
fixed by the Central Bank. Since 1974, the reserve requirement ratio has been set
at 5%, the liquid asset ratio at 20% of demand deposit and 15% of time and
savings deposits and loans. Reserve requirements are not applied to offshore
banks licensed to operate in the Bahamas, and the Bahamas does not
prescribe liquidity requirements for international bank branches. Instead, the
Bahamas relies on the centralized control system of parent banks to oversee
overall liquidity on a global basis.
2. There are no restrictions on the types of deposits banks can offer in local and
foreign currencies. However, in the case of foreign currency, the issuance of
certain deposit instruments, such as Euro-Certificates of Deposit, promissory
notes and debentures, require the approval of the Central Bank of the Bahamas.
3. There are no limit for deposits.
4. There are no legal lending limits for deposits or limits on the level of concentration
for specific types of deposits. However, when appropriate, the prescription of
prudential norms and limits affecting the relationship between capital and level of
deposits are applied on a case-by-case basis.