Central Bank of The Bahamas regulators are counting on enhanced regulatory measures, which require banks operating in the Bahamas to maintain adequate capital levels and minimise risks, as a key initiative to help promote The Bahamas as a world-class financial services jurisdiction, bank officials said Monday.
Organisers of a weeklong training exercise say adherence to requirements of the international regulatory standard, known as the Basel Accords, is aimed at maintaining the soundness of financial institutions and protecting their clients.
Speaking at the opening of the seminar on Monday, Manager of Bank Supervision at the Central Bank of The Bahamas Cassandra Nottage said intensive training on the Basel Accords would provide numerous benefits for clients of financial institutions.
“It’s all about protecting the depositors as we know that the risk that has been most troublesome to banks that have failed is the credit risk,” Ms. Nottage said. “That’s why the first capital accord concentrated on credit risk and is now focusing on supplemental risks.”
According to Ms. Nottage, some of the additional risks that will be considered throughout the week are supervisory and operational, as the stepped up risk analysis will “give us a further comfort level that the institutions are sound.”
The Basel Accords are a set of standards designed by experts from the G-10 countries – like Canada, Germany and the United States – relating to bank regulation that specify requirements for capital adequacy and risk management.
The original Accord, designed in 1988 was implemented in The Bahamas in 1992, Ms. Nottage said.
She added that the Basel regulatory standards are widely accepted and are used to promote financial sector stability in jurisdictions around the world.
Also speaking at Monday’s opening ceremony held at the British Colonial Hilton hotel, Central Bank Governor Julian Francis noted the important role of the Basel Accords and enhanced supervisory measures.
“It is important to state that The Bahamas is committed to implementing a capital adequacy regime which is appropriate to the maintenance of a strong international banking centre,” Mr. Francis said. “The Central Bank of The Bahamas requires its licensees, by law, to maintain capital arrangements, which are at least consistent with the existing Basel requirements.”
Mr. Francis elaborated on developing techniques for bank regulation like consolidated supervision, which has proven to be an essential tool for the supervision of banks.
“This comprehensive approach to banking supervision takes into account consideration of the risks and activities of the entire banking group or financial conglomerate, including direct subsidiaries and branches, and also non-bank companies and other financial affiliates and special purpose vehicles,” he added.
Mr. Francis pointed out that consolidated supervision is especially important for The Bahamas as the jurisdiction hosts 288 licensees from over 30 countries.
The Bahama Journal
