Central Bank: Most offshore banks report no COVID-19 impact

Central Bank: Most offshore banks report no COVID-19 impact
Central Bank (photo courtesy of the Central Bank)

NASSAU, BAHAMAS — The impact of the COVID-19 pandemic on internationally active supervised financial institutions (SFIs) in The Bahamas has so far proven ‘manageable’, according to the Central Bank.

Sixty-five percent of respondents to a recent survey by the regulator reported little to no financial impact.

The survey was issued by the Central Bank to 84 active internationally active SFIs on May 14.

It included nine questions related to the operational and financial impact of the COVID-19 pandemic and had 72 respondents by June 12.

The survey only covered internationally active licensees like offshore banks and trusts, and excluded domestic banks, credit unions, and money transmission businesses.

When asked what were the key economic/business challenges faced by their institution arising from the COVID-19 pandemic, 21 SFIs or 29 percent of respondents indicated that there was little or no impact.

Of those indicating a more than insignificant impact, 17 SFIs or 24 percent cited business continuity concerns or remote working challenges.

“1 SFI reported challenges from travel restrictions or the inability to onboard clients,” the bank reported.

“14 SFIs (19 percent) expressed concerns over market volatility or economic downturn fears. 19 SFIs (26 percent) indicated a combination of two or more of the above-noted impacts.”

It continued: “In response to the business continuity challenges, respondents described their arrangements in place to execute critical operational activities.

“Responses included the use of laptops/tablets and use of employee home computers to access private networks. Respondents also noted challenges with local utility dependability, which decreased productivity of some work at home staff. In some cases, these steps were rolled out as a part of a pre-existing business continuity plan.

The bank said: “Other SFIs had to adopt quickly, without an existing plan. With regard to group structures, respondents described challenges experienced by parent entities similar to those of the subsidiary entities, mostly related to environmental, economic and market concerns. SFIs with Brazilian parents conveyed more turmoil than for any other geographic area.”

“When asked if the parent was willing and able to provide liquidity support, all of the respondents for which the question applied expressed that their parents were able to support. There were no negative responses.”

In response to the question on assets growth/structure, provisioning or profitability, 47 SFIs (65 percent) responded that the pandemic has had little or no financial impact.

“For the minority of respondents reporting an impact, 8 SFIs (11 percent) cited concerns with Loan loss Provisioning or asset devaluation, while 16 SFIs (24 percent) expressed concerns with revenue (fee/interest income) or growth potential.

“One SFI reported concerns with both,” the regulator added.