New laws to govern banks and trust companies tabled

The government is seeking to consolidate and modernize the laws regulating banks and trust companies in The Bahamas, with the Banks and Trust Companies Regulation Bill 2020, which was tabled in the House of Assembly yesterday.

The lengthy bill would repeal the Banks and Trust Companies Regulation Act, 2000, and would provide a special resolution framework for banks.

Some particulars of the new bill include making provisions for approval from The Central Bank of The Bahamas (CBOB) for any company or person to use the words bank, trust, trust company, trust corporation, savings or savings and loan, or any derivatives of either in any language for the carrying out of business; and for any persons or company desiring to carry out the business of money transmission services to apply for a license through the CBOB.

The bill would provide for the appointment of a statutory administrator, which would have full and exclusive powers to manage and operate a bank in the event that it is found that a bank has engaged or is engaging in unsafe and unsound practices that would weaken the bank’s condition, threaten the depositors’ interests or dissipate the bank’s assets; or is in contravention of the act.

It allows for the CBOB to exercise the powers of a statutory administrator and liquidator in order to maintain financial stability, protect and enhance public confidence in the stability of the banking system of The Bahamas, and protect depositors inclusive of ensuring prompt payouts of deposits in a bank liquidation.

Also tabled in the House on Monday was the Protection of Depositors (Amendment) Bill, 2020, which seeks to not only enhance depositor protection, but also the corporate governance framework of the Deposit Insurance Corporation (DIC).

This bill also seeks to reduce the time within which the DIC must make payouts to depositors following the failure of a member institution; and to include co-operative credit unions in the membership of the Deposit Insurance Fund.

The DIC is financed by annual premiums levied on the 11-member financial institutions, which covers the client deposits of those institutions in the event that a bank or financial institution is forced to close.

The amendments also make membership in the DIC compulsory for those co-operative credit unions.

Additionally, the bill provides for an increase in the annual premiums payable by members of the fund from one twentieth of one percent to one tenth of one percent of the insured deposits.

Provisions are also made in the bill to authorize the minister of finance to lend funds from the Deposit Insurance Fund to the DIC.

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Paige McCartney

Paige joined The Nassau Guardian in 2010 as a television news reporter and anchor. She has covered countless political and social events that have impacted the lives of Bahamians and changed the trajectory of The Bahamas. Paige started working as a business reporter in August 2016. Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News

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