By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank’s governor yesterday confirmed that the preferred operator for The Bahamas’ first-ever Credit Bureau will be unveiled in January amid IMF calls for its “speedy” creation.

John Rolle, in a brief e-mailed reply to Tribune Business’ questions, confirmed that the selection process for the entity that will manage a facility deemed vital to improved Bahamian lending efficiency is nearing its conclusion.

“We are at the end of the review process. The preferred operator will be announced in January,” Mr Rolle said. The Government, too, in its response to the IMF findings, said it was committed to “establishment of the Credit Bureau without delay to enhance credit market efficiency and increase credit growth”.

Their assessment was yesterday backed by Gowon Bowe, the Clearing Banks Association’s chairman, who represents the sector on the committee set up to evaluate Credit Bureau operator bids.

He revealed that the selection committee was last week conducting overseas “site visits” at facilities already operated by “short-listed candidates”, and its recommendations should be submitted to Mr Rolle and the Central Bank shortly.

“We are actually on our way to getting things done,” Mr Bowe said. “If you have been following the Central Bank, this has been in the pipeline for several years. We’re at the point where the committee will be recommending one to all the decision-makers.”

The Central Bank’s progress is timely given that the International Monetary Fund’s (IMF) statement yesterday, summarising the findings of its December 3-7 visit to The Bahamas, called for the rapid establishment of the Credit Bureau as a means to unlock the loan growth that has traditionally fuelled much of the Bahamian economy.

“The banking system as a whole has strong capital and liquidity ratios, and banks have made progress towards improving asset quality,” the IMF said, in what was a markedly more upbeat assessments of The Bahamas’ economic prospects and reform progress compared to recent assessments.

“As of June 2018, the average capital to risk-weighted assets ratio across domestic institutions was 34 percent, above the regulatory target ratio of 17 percent, and non-performing loans declined to 9.6 percent of total loans, from 12.3 percent a year earlier.”

Aside from the positives, the IMF then called for The Bahamas to complete long-planned structural reforms to its credit/lending market. “The mission recommended the speedy establishment of the Credit Bureau to enhance credit market efficiency, increase credit growth, and help financial inclusion,” the Fund added.

The Bahamas’ Credit Reporting Project was launched by the Central Bank in 2010, in a bid to establish a national credit reporting system that included the Credit Bureau. The Bill and and accompanying regulations to give legal effect to its creation were first issued for public consultation in September 2014, and were further revised since before finally being brought for debate and passage in Parliament earlier this year.

Credit Bureaus, which are found in most countries, collect personal and financial information on persons and companies, and then issue this to client lenders via a credit report. A Credit Bureau’s clients typically include banks, mortgage lenders, credit card firms and other financing companies.

The Central Bank has long believed that the banking industry’s non-performing loan crisis in the aftermath of the 2008-2009 recession may have been mitigated, to some extent, if a Credit Bureau was already in existence to provide more accurate, up-to-date information on the creditworthiness of borrower candidates.

Wendy Craigg, Mr Rolle’s predecessor as Central Bank governor, told Tribune Business in 2014 that one of the Credit Bureau’s advantages will likely be that Bahamians with good credit histories can enjoy lower interest rates (reduced debt servicing costs) and improved credit access.

“A Credit Bureau will have benefits for both lenders and borrowers,” she said. “For the borrowers, they will be motivated to improve their credit and payment behaviour; they will benefit from faster credit decisions; and those with good credit histories may be rewarded through lower collateral requirements for loans and even lower interest rates.

“Lenders will have increased access to accurate and more comprehensive information about borrowers’ credit history and payment habits, which will allow for a more informed assessment of creditworthiness; their own credit decision-making process will be streamlined; their lower exposure to risky loans would favourably impact operational costs; and, especially for banks, improve their capital positions and reduce provisioning requirements. Importantly, lenders will be able to offer more risk-based pricing to customers, favouring persons with good credit histories.”

The IMF, meanwhile, also backed the Central Bank’s efforts to develop a digital version of the Bahamian dollar as a means to generate greater financial inclusion - especially for remote Family Island communities that lack a physical bank presence.

“The Central Bank of The Bahamas is preparing to pilot a digital central bank currency. The team recognised the role new financial technologies can play in fostering financial inclusion, and concurred that a gradual approach will help mitigate potential risks to the economy,” the Fund’s statement added.

It supported the Government’s bid to address the “structural deficiencies” in The Bahamas’ anti-financial crime regime, adding: “The mission welcomed the Government’s firm commitment to a well-regulated international financial and business sector, and recognised the significant steps taken to increase compliance with international standards on anti-money laundering and combating the financing of terrorism.

“The team made the case for sustaining efforts to fully implement the ‘Action Plan’ agreed with the Financial Action Task Force (FATF), including to mitigate financial risks associated with the withdrawal of correspondent banking relationships.”