$167Mn Bank of Bahamas Payout Rolled Over By Government

  • The Government has decided not to complete the Bank of Bahamas’ rescue by injecting $167Mn in cash to replace a “promissory note” after efforts to recover the latter’s toxic commercial loans proved “trickier” than anticipated.
  • The Bahamas International Securities Exchange (BISX) listed institution’s 2022 full-year financial statements, released last week, revealed that the Government has instead agreed to a three-year roll-over or extension to the maturity of the note that had been due for repayment at end-August 2022.
  • Simon Wilson, the Ministry of Finance’s financial secretary, explained that it had proven “much more complex” than thought for the Bahamas Resolve to realise and sell the assets that were pledged as collateral to secure the Bank of the Bahamas’ previous delinquent commercial loans.
  • The Bahamas Resolve is the special purpose vehicle (SPV), created in 2014, to which the Bank of Bahamas’ toxic commercial credit was transferred to prevent the latter’s collapse and thus facilitate its rescue. To fill the gap created by the transfer, two promissory notes were injected into the bank’s balance sheet, worth $100Mn and $167Mn, respectively, in 2014 and 2018.
  • The latter was due for redemption or payout by the Government at end-August, which would have required the promissory note’s replacement with liquid cash provided by the Bahamian taxpayer - the final step in the bail-out. However, the Bank of Bahamas’ annual financial revealed: “The promissory note with a maturity date of August 31, 2022, was extended by three years to August 31, 2025, at 4% fixed interest rate with quarterly interest payments.”
  • The maturity extension will give Bahamas Resolve, in particular, as well as the Government extra time and breathing room to realise more funds from selling off the loan collateral. Previous projections have suggested that Bahamas Resolve could realise up to $67Mn from these secured assets, which would substantially reduce the Government and taxpayer’s liability to the Bank of Bahamas down to around $100Mn.

(Source: The Tribune)