By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Development Bank must become "self-sufficient" by 2020, which is when the Government will cease contributing $3 million annually towards its bond interest payments.

K P Turnquest, the deputy prime minister, told the House of Assembly that "the onus" is on the BDB's new Board and management to make the organisation financially viable, and fulfill its mandate of financing Bahamian entrepreneurs' ventures.

He urged delinquent BDB borrowers to agree payment plans with the institution, emphasising that while the Government did not want to close businesses and seize collateral, capital needed to be freed-up to assist new entrepreneurs.

Disclosing that the Government pays $3 million annually to the BDB "in support of its bond interest", Mr Turnquest revealed: "The bank has been told that within three years the Government of the Bahamas will cease that support, and they will have to be self-sufficient. The onus is on them to perform."

An extraordinarily high level of loan delinquencies, coupled with a seeming reluctance to secure collateral for these borrowings, has been a key factor behind the BDB's struggles and strained financial performance.

Its ability to finance, and assist, good quality ventures by Bahamian entrepreneurs has been substantially diminished, with Mr Turnquest yesterday reiterating that the BDB was "being restructured with the aim of becoming self-sufficient".

This is also designed to provide new lending capital, and the Deputy Prime Minister said controls and management were being put in place to ensure the BDB "does not become a burden on the public purse".

"I call on delinquent borrowers to go in and make arrangements," he warned. "We have no interest in forcing people out of business or taking away businesses, but the Government has a wider obligation to the Bahamian people to ensure the BDB can fulfill its mandate and remain viable so it can assist other Bahamians."

Turning to the troubled Bank of the Bahamas, Mr Turnquest criticised the former Christie administration's October 2014 rescue plan for removing too few toxic loans from the balance sheet, suggesting there may have been "one of two untouchables".

Referring to the latest $166 million non-performing loan transfer to Bahamas Resolve, the Deputy Prime Minister said: "A lot of those loans should have been transferred in the first rescue plan.

"Having kept them on the books of Bank of the Bahamas, and continuing to be non-performing, dragged down the ratios of the bank and made for an unsustainable position.

"It was unfortunate the way it appeared to have been done. There may have been one or two untouchables, I don't know, but it was not operating optimally. While it [the first rescue] may have helped, it did not address all the issues at the bank."

Mr Turnquest argued that the latest $166 million toxic loan transfer had better cleaned up Bank of the Bahamas' balance sheet, and freed up capital for it to begin lending again.

The Deputy Prime Minister expressed confidence in the ability of the bank's Board and management to "create value for Bank of the Bahamas shareholders and wider society through innovative and creative financial products to help secure their lives and futures".