ANNUAL REPORT - DICD’DAndrd ea Rama see y, Ana lysst ; MsM. Chereryly For be s, Ass ista nt Lea d Su p e rvvisor ; Mr. Jee ro mme e Joh ns on , LeLe add Supp ere vivso r 10 DEPOSIT

ANNUAL REPORT

DEPOSIT INSURANCE CORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 1

SAFEGUARDING YOUR FUNDS

The Deposit Insurance Corporation (DIC) provides deposit insurance protection and support for Bahamian Dollar depositors, thus minimizing risk to depositors and contributing to the stability of the


OUR MISSIONTo provide deposit insurance protection and support for Bahamian Dollar depositors, and thereby

OUR VISIONWe strive to be an effective and prudent deposit insurer, achieving full compliance with international best

OUR CORPORATE VALUES

DEPOSIT INSURANCE CORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 3DDDDDEDEDDDDDEDEDDDDDEDEPOPOPOPOPOOPOSISISSISISISISIS TTTTTTT IININNINININININSUSUSSUSUSSUURARARARARAARA CNCNCNCCNCNCCNCCNCNCNCCEEEEEEEEEEEEEEEEEEEEEEEEEEEE COCOCOCOCOCOCCCOC RRPPRPRPRRPR OROORORORORRORORATATATATAATIOIOIOIOOOIOI NNNNNN |||||| 202020020202022018181818188118 AAAAAAAANNNNNNNNNNNNNNNNNNUAUAUAUAUAUAUAUAU LLLLL LL REREREREREREREREREPOPOPOPOPOPOPOOPORTRTRTRTRTRTRTRTRTRTRTRTRRTRT &&&&&&& FFFFFFININININNININNANANAAANANCICICICICIALALALLAL SSSSSTATATATTATATATETETETTETETETETEEETEMEEMEMEMEM NTNTNTNTNTTNTSSSSS888888 333TSSSS

CORPORATE PROFILE

Board of Directors John Rolle - Chairman of the Board of Management, Governor, Central Bank of The Bahamas Karen Rolle - Deputy Inspector of Banks and Trust Companies, Central Bank of The BahamasRochelle Deleveaux-McKinney - Legal Counsel and Secretary to the Board, Central Bank of The BahamasMarlon Johnson - Acting Financial Secretary, Ministry of FinanceVacant – External Director Vacant – External Director

Management & Operations TeamBank Supervision Department, Central Bank of The Bahamas:Jerome Johnson - Lead SupervisorCheryl Forbes - Assistant Lead SupervisorD’Andrea Ramsey - Analyst II

Auditor Baker Tilly Gomez Deposit Insurance CorporationChartered Accountants Corner of Trinity Place & Market Street

BankerCentral Bank of The BahamasFrederick Street


Dear Deputy Prime Minister:

forwarding to you, on behalf of the Board of Management, the Annual Report of the Deposit

Respectfully yours,

Chairman

Deputy Prime Minister & Minister of FinanceMinistry of Finance

West Bay Street

DEPOSIT INSURANCE CORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 5DEPOSIT INSURAANCE CORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 8 55

ABBREVIATIONS

ACT PROTECTION OF DEPOSITORS ACT, 1999

AMP ADMINISTRATIVE MONETARY PENALTY

BRS BAHAMAS REGISTERED STOCK

BOM BOARD OF MANAGEMENT

BSD BANK SUPERVISION DEPARTMENT

BTCRA BANKS AND TRUST COMPANIES REGULATIONS ACT

BYE-LAWS PROTECTION OF DEPOSITORS BYE-LAWS, 1999

CBBA CENTRAL BANK OF THE BAHAMAS ACT

CBOB CENTRAL BANK OF THE BAHAMAS

CDS CERTIFICATES OF DEPOSIT

CRC CARIBBEAN REGIONAL COMMITTEE OF DEPOSIT INSURERS

DIC DEPOSIT INSURANCE CORPORATION

DIF DEPOSIT INSURANCE FUND

DFIU DOMESTIC FINANCIAL INSTITUTIONS UNIT

D-SIB DOMESTIC SYSTEMICALLY IMPORTANT BANK

FSAP FINANCIAL SECTOR ASSESSMENT PROGRAM

FSB FINANCIAL STABILITY BOARD

GDP GROSS DOMESTIC PRODUCT

IADI INTERNATIONAL ASSOCIATION OF DEPOSIT INSURERS

IFRS INTERNATIONAL FINANCIAL REPORTING STANDARDS

IMF INTERNATIONAL MONETARY FUND

ISA INTERNATIONAL STANDARDS ON AUDITING

MOU MEMORANDUM OF UNDERSTANDING

NPL NON PERFORMING LOAN

PPO PUBLIC POLICY OBJECTIVE

SFI SUPERVISED FINANCIAL INSTITUTION

DEPOSIT INSURANCE CORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 6 DEPOSIT IINSURANCEE COORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 86

CONTENTS

22 Overview of the Domestic Macroeconomic Environment


with credit unions and the commercial banks on the

this juncture, analysis continues to be conducted on the deposit characteristics and other components of the credit

In its public education and outreach, the Corporation will increase its collaboration with member institutions, to ensure wider dissemination of information on the

at public education via social media and traditional

The achievements of the Corporation are due to the support of the Board of Management and the dedicated technical and administrative professionals of the Central

of Lorne Basden and Aluchifer Rolle for their service as Members of the Board of Management of the

year of deposit insurance in The Bahamas, our team will remain committed to advancing the strategic mission of

John RolleChairmanDeposit Insurance Corporation

Ipace, supported by tourism gains and continued foreign investment-led activity in the construction

unemployment rate slightly increased as the workforce

However, banks’ credit quality indicators improved given strengthened economic conditions, and banks’ ongoing efforts at debt restructuring and continued aggressive

During the year, the number of member institutions

other bank and trust companies with Bahamian dollar

million, with the premium assessment rate unchanged at one-twentieth of one percent of the average insurable

The safety and soundness of DIC members, rest on the supervisory oversight exercised by the Central

of commercial banks to detect and address emerging

regime, member institutions were subjected to a combination of on-site examinations, offsite-monitoring,

The work of the Corporation continued to be guided

heightened focused on public awareness, and the exercise

made for the DIC framework to be evaluated against best

assessment program mission to The Bahamas, which

on options to integrate credit unions in the insurance

The work plan of both the Central Bank and the DIC will prepare for the necessary integration of credit unions

to transition credit unions to a risk-based oversight

A MESSAGE FROM THE CHAIRMAN

DEPOSIT INSURANCE CORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 8 DEPOSIT INSURANCE CORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 88

BOARD OF MANAGEMENT December 31, 2018

Aluchifer RolleAgency Manager

BAF FinancialAppointed: January 2013

Lorne BasdenPresident,

Basden Elevator Services LimitedAppointed: January 2013

John RolleChairman of the Board

of Management,Governor, Central Bank of The Bahamas

Appointed: January 2016

Marlon JohnsonActing Financial Secretary

Ministry of FinanceAppointed: September 2017

Rochelle Deleveaux-McKinneyLegal Counsel & Board Secretary

Central Bank of The BahamasAppointed: July 2014

Ms. Karen RolleDeputy Inspector of Banks and Trust Companies

Central Bank of The BahamasAppointed: July 2014

IMMEDIATE PAST BOARD MEMBERS


MANAGEMENT AND OPERATIONS TEAM

Pictured standing from left: Mrs. D’Andrea Ramsey, Analyst; Ms. Cheryl Forbes, Assistant Lead Supervisor; Mr. Jerome Johnson, Lead Supervisor

DEPOPOSIT INNSUSUUUSURARANCNCNCE E COCOC RPORATATIOIONN | 20201818 AANNNNUAUAL L REREPOPOP RTRT &&& FFFINININANANANCICIIALALAL SSSTATTATEMENTTSS88 9

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1. WHAT IS DEPOSIT INSURANCE?Deposit Insurance is an arrangement designed to minimize or eliminate the risk of loss of deposits, in the event that an insured institution of the Deposit Insurance

2. WHAT IS THE DEPOSIT INSURANCE FUND?The Deposit Insurance Fund is an accumulated pool of funds comprising premium contributions of member institutions and interest income earned on the investment

3. WHAT IS AN EX-ANTE FUNDING SYSTEM?An ex-ante fund involves the advance accumulation and

The fund consists primarily of premiums collected from

4. WHAT IS THE DEPOSIT INSURANCE CORPORATION?The Deposit Insurance Corporation (DIC) is a body corporate that was established under the Protection of Depositors Act and came into force

administration and management of the Deposit Insurance

5. ARE ALL BANKS MEMBERS OF THE DEPOSIT INSURANCE FUND?

Bahamian dollar deposit-taking banks that are licensed

list of member institutions of the DIC may be obtained

6. MUST I APPLY OR REGISTER FOR DEPOSIT INSURANCE PROTECTION?

Deposit Insurance is provided automatically and free of

7. WHAT ARE ELIGIBLE DEPOSITS? Eligible deposits are certain types of accounts as

other foreign currency deposit accounts are not eligible

8. WHAT TYPES OF DEPOSITS ARE INSURED? Bahamian dollar deposits in checking, savings, demand and time accounts held in member institutions are

9. WHAT IS THE MAXIMUM DEPOSIT AMOUNT INSURED BY THE DIC?Eligible deposits in member institutions are insured up to

10. WHAT IS THE MEANING OF THE TERM “SAME RIGHT AND CAPACITY?”The term refers to the nature of the ownership of deposits with member institutions such as single (individual),

11. IS INTEREST OWING ON A DEPOSIT INCLUDED IN THE INSURABLE AMOUNT?

eligible deposits at each member institution, up to a

FREQUENTLY ASKED QUESTIONS


12. I AM A NON-RESIDENT OF THE BAHAMAS. ARE MY DEPOSITS PROTECTED?

denominated deposits placed with a member institution

13. ARE THERE ANY DEPOSIT TYPES THAT ARE NOT COVERED BY DEPOSIT INSURANCE?

stand-by letters of credit or instruments of a similar nature, subordinated debts, preference shares, interbank deposits, foreign currency deposits, deposits of Government and statutory corporations, deposits

institution wholly owned by the Government and

14. IF I HAVE DEPOSITS IN SEVERAL BANKS, WILL THEY BE AGGREGATED FOR DEPOSIT INSURANCE PROTECTION PURPOSES?

limit is applicable to each depositor in respect of

15. CAN DEPOSIT INSURANCE PROTECTION BE INCREASED BY DEPOSITING FUNDS INTO SEVERAL BRANCHES OF THE SAME BANK?

deposit accounts in one or more branches of a member institution, all of these accounts are added together, and the maximum insurance cover is available up to

16. HOW ARE JOINT ACCOUNTS INSURED? The DIC will deem the interest of co-owners in joint accounts to be equal, unless there are records of the

are insured separately from individually owned deposit

owners of a savings account, and each owns a savings account, the joint account and each of their savings accounts are separately insured, up to the maximum

is also a co-owner in other accounts involving different joint account owners, his interest in all joint accounts are added together and the aggregate amount is insured up to

17. WOULD THE BORROWER’S OBLIGATIONS TO THE INSTITUTION CONTINUE AFTER THE INSTITUTION IS CLOSED?

institutions that have been closed must continue to make payments on the same terms and conditions attached to

18. WHEN WOULD A DEPOSIT INSURANCE PAYOUT BE MADE?A deposit insurance payout will be made where the Central Bank has determined that a DIC member institution is insolvent, or unable or likely to become unable to meet its obligations or, is about to suspend

19. WHAT IS THE ROLE OF THE CENTRAL BANK IN DEPOSIT INSURANCE?The Central Bank is responsible for the daily operations of the DIC and provides staff and administrative services

DEPOSIT INSURANCE CORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 12 DEPOSIT ININSUSURARANCNCEE COCORPRPORORATATIOIONN | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS812

It should be noted that the member institutions do not hold an equity position in the DIC, their contributions

-

Membership in the DIC is compulsory for all licensed institutions carrying on banking business wholly or

relationship between the DIC and the Central Bank, the Corporation is a separate statutory body with its own

management services of the DIC are carried out by staff of the Central Bank as provided under a service level

effects of the bank failure, the Government enacted

Deposit Insurance Corporation (DIC) to administer and -

retroactive deposit insurance coverage to the Bahamian

The DIC was funded by a compulsory initial contribution

member institution was based on their pro-rata percent-age share of all deposits insured by the DIC on the last

HISTORY OF DEPOSIT

INSURANCE IN THE BAHAMAS


A LOOK AHEAD TO 2019DEPOSIT INSURANCE CORPORATION’S 20TH ANNIVERSARY

• CELEBRATING TWENTY YEARS IN

OPERATIONS (1999 – 2019).

• EXPANDING DEPOSIT INSURANCE

COVERAGE TO FINANCIAL

COOPERATIVE CREDIT UNIONS.

• FORMULATING A NEW STRATEGIC

PLAN FOR THE FIVE-YEAR PERIOD OF

2020 – 2024.

• PURSUING FINALIZED LEGISLATIVE

AMENDMENTS FOR THE CENTRAL

BANK OF THE BAHAMAS TO ASSUME

FULL RESOLUTION AUTHORITY

POWERS.

• USING THE 2019 FINANCIAL SECTOR

ASSESSMENT PROGRAM (FSAP)

REVIEW OF THE INTERNATIONAL

MONETARY FUND, TO FURTHER

STRENGTHEN THE PROTECTION OF

DEPOSITORS’ FRAMEWORK.

• ADVANCING NEW PUBLIC AWARENESS

ACTIVITIES VIA SOCIAL MEDIA AND

TRADITIONAL COMMUNICATIONS

CHANNELS.

• ENGAGING MORE WITH MEMBER IN-

STITUTIONS IN EXECUTING OUTREACH;

AND AWARENESS INITIATIVES.

• FACILITATING NEW SURVEYS TO

MEASURE THE EFFECTIVENESS OF

PUBLIC AWARENESS CAMPAIGNS.

IN 2019 THE DIC LOOKS FORWARD TO…


Commercial Banks Year No. of 2014 2015 2016 2017 2018 Established Branches

Citibank N.A. 17-Jan-66 1 96.6 90.1 86.4 81.1 79.2

Finance Corporation of

Bahamas Ltd. 23-May-66 4 672.0 631.4 639.0 568.1 492.1

Commonwealth Bank Ltd. 10-Oct-66 12 1,055.6 1,095.0 1,208.6 1,238.1 1,277.3

Bank of The Bahamas Ltd. 28-Jul-70 11 362.9 304.2 599.4 565.9 579.4

Fidelity Bank (Bahamas) Ltd. 11-Jul-78 6 368.5 371.4 404.8 461.3 492.8

FirstCaribbean International

Bank (Bahamas) Ltd. 07-Dec-95 12 1,123.8 1,127.5 1,184.0 1,310.1 1,283.8

Scotiabank (Bahamas) Ltd. 26-Mar-98 13 782.3 764.1 874.2 924.6 897.2

RBC Royal Bank

(Bahamas) Ltd. 26-Oct-10 12 1,196.5 1,289.0 1,530.7 1,495.8 1,448.9

Total: Commercial Banks 5,658.2 5,672.7 6,527.1 6,645.0 6,550.7

Other Members

Ansbacher (Bahamas) Ltd. 17-Jan-66 1 2.9 1.5 3.0 2.8 8.7

The Bank of NovaScotia Trust Company

(Bahamas) Ltd. 01-Apr-66 1 0.1 0.1 0.3 1.2 1.3

Royal Fidelity Merchant Bank& Trust Ltd. 15-Sep-98 1 31.9 31.1 61.6 71.8 59.4

Total: Other 34.9 32.7 64.9 75.8 69.4

Total All Members 5,693.1 5,705.4 6,592.0 6,720.8 6,620.1

The Bank of NovaScotia Trust Company

(Bahamas) Ltd. 01-Apr-66 1 0.1 0.1 0.3 1.2 1.3

Bank of The Bahamas Ltd. 28-Jul-70 11 362.9 304.2 599.4 565.9 579.4

Finance Corporation of

Bahamas Ltd. 23-May-66 4 672.0 631.4 639.0 568.1 492.1

DIC MEMBER INSTITUTIONSTOTAL B$ DEPOSITS (MILLIONS)

FirstCaribbean International

Bank (Bahamas) Ltd. 07-Dec-95 12 1,123.8 1,127.5 1,184.0 1,310.1 1,283.8

RBC Royal Bank

(Bahamas) Ltd. 26-Oct-10 12 1,196.5 1,289.0 1,530.7 1,495.8 1,448.9

DEPOSIT INSURANCE CORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 15DEDEDEDEPOPOPOPOSISISISITTTT ININININSUSUSUSURARARARANCNCNCNCEEEE COCOCOCORPRPRPRPORORORORATATATATIOIOIOIONNNN ||||| 2020202018181818 AAAANNNNNNNNUAUAUAUALLLL REREREREPOPOPOPORTRTRTRT &&&& FFFFININININANANANANCICICICIALALALAL SSSSTATATATATETETETEMEMEMEMENTNTNTNTSSSS8888 1515155

2014 2015 2016 2017 2018

Members’ Premiums 2,773 2,858 2,874 2,905 3,149

Interest & Other Income 1,595 1,781 1,970 2,056 2,292

Total Revenue 4,368 4,639 4,844 4,961 5,441

Operating Expenses 31 33 33 33 34

Comprehensive Income 4,298 4,569 4,773 4,915 5,743

Deposit Insurance Fund 35,865 40,434 45,207 50,122 55,865

Investment Securities 35,071 40,381 44,353 49,347 52,965

Total Assets 36,365 40,992 45,766 50,681 56,424

Member Institutions (#) 12 12 12 12 11

FIVE-YEAR FINANCIAL HIGHLIGHTS (B$’000)

DEPOSIT INSURANCE CORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 16 DEPOSSIT INNSURANCE CORPPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 816

MEMBER PERFORMANCE

-ment with a non-member entity and ceased to hold Baha-

dollar business remained concentrated in the commercial

in comparison to the previous year due to growth in the economy, debt restructuring activities and loan write-

-

point rise in the ratio of total provisions to arrears to

This was due largely to a decline in losses from provi-sions for bad debts and lower depreciation expenses,

net interest margin on core deposit and lending activities

Banks’ capital levels also remained high, averaged at

The DIC relies on the Central Bank’s supervisory and -

ulatory and supervisory initiatives undertaken during the year were highlighted as follows:

• Continued advancement of the implementation of

Implementing Basel III: Liquidity Coverage Ratio

liquidity rules, introduced by the Basel Committee, provide Supervised Financial Institutions (SFIs) with a credible and comprehensive framework for managing liquidity risks in their day-to-day

• General Data Dissemination System (eGDDS)

the IMF, this online portal was the results of collaboration between various statistical agencies, to provide the public with centralized access to

various international agencies can now access standardized data directly using the Statistical Data and Metadata Exchange (SDMX) software tool, thereby improving data transparency and

• Released revised Guidelines on the Prevention of Money Laundering & Countering the Financing

outline the Central Bank’s mandatory minimum customer due diligence requirements for all banks, trust companies, co-operative credit unions, non-bank money transmission businesses and payment

•

Supervised Financial Institutions under The Bahamas’ Anti-Money Laundering and Countering

procedures the Bank will generally follow when it has concerns about the operations of a SFI or in the event of non-compliance with the Financial Transactions Reporting Act or any other relevant

The Central Bank continues to pursue a risk-based ap-proach to supervision of SFIs, along with onsite exami-nations, stress testing of credit and liquidity risk factors and structured prudential meetings to discuss credit and operational risk issues, organizational changes and the

-proach to supervision supports the Central Bank’s ‘Lad-der of Supervisory Intervention’, which is aimed at early


OPERATIONSCorporate Governance

statutory responsibility to the Bank to ensure stability

oversee the deposit insurance fund for Bahamian dollar

corporate, established under the Protection of Depositors

the risk of loss of savings of small Bahamian depositors in the event of bank failures, and to arrange for the

The DIC assesses and collects premium contributions

premiums are levied at a rate of one-twentieth of one

deposits held in the DIC domestic banking member

premiums levied and collected during the year amounted

Due to the current limited scope of activities, the DIC has

the daily operations of the DIC, and provides staff and administrative services to the DIC which is administered

As a result of increasing activities in the DIC’s approved

Bank will be recruited to the DIC’s operations on a full

The Board of Directors

Board of Management (the Board) which is responsible for the policy direction of the DIC, including its strategic

Members of the Board are appointed for a term of

a Code of Conduct which articulates the ethical standards

Finance has agreed to the payment of an honorarium for

key risk indicators of member institutions, the adequacy and soundness measures to target a higher level of funding resources for the DIC, extension of insurance

Governor of the Central Bank (Chairman), the Manager of Bank Supervision, another Manager of the Central Bank, the Financial Secretary of the Ministry of Finance, and two persons having knowledge and experience in

equality of the voting, the Chairman has a casting vote in

Board of Management as follows:

Mr. John RolleChairman of the Board and GovernorCentral Bank of The Bahamas

Mr. Marlon JohnsonActing Financial SecretaryMinistry of Finance

Ms. Karen RolleDeputy Inspector of Banks and Trust CompaniesCentral Bank of The Bahamas

Mrs. Rochelle Deleveaux-McKinneyLegal Counsel & Board SecretaryCentral Bank of The Bahamas

The appointment terms of the following two board mem-

Mr. Lorne BasdenPresidentBasden Elevator Services Limited


Mr. Aluchifer RolleAgency ManagerBAF Financial

International Associations

IADI aims, inter-alia, to contribute to the stability

guidance for establishing new and enhancing existing

in IADI and the IADI Caribbean Regional Committee (CRC) continues to provide forums for the exchange of knowledge and opportunities to further professional

Caribbean Regional Committee (CRC)Members of the IADI CRC deposit insurers include the

the members, facilitating cooperation on the development of deposit insurance systems, resolution management of

-

-vide a voice to the common interests and issues affecting

Staff DevelopmentIn line with its strategic objective of ensuring that DIC staff have the requisite technical competencies and knowledge to facilitate operational readiness of the DIC,

Strategic Goals & Activities

submitted the granular data on deposits that informed new simulations of risks to the deposit base, and net

point to the need to expand the size of the Fund as a shared total relative to insured deposits, and to have access to contingency lines of funding arranged in the event required payouts ever exceeded accumulated

recommendations to the Minister of Finance to secure

With reference to operational readiness, the DIC conducted a desktop crisis management simulation

least cost options to liquidate failed institutions, and it reinforced the statutory importance of strengthening The

submitted for public consultation proposes to delegate the Central Bank with the powers of the resolution authority,

committed to continue to enhance its operational capacity as per the results of the simulation exercise, including targeting shorter administrative timelines to complete

paper to member institutions as well as the credit unions, on a proposed deposit insurance coverage scheme for the

maintain a single deposit insurance fund for the banking and credit union sectors and maintain a uniformed insurance coverage limit for both banks and credit

legislative amendments to the Protection of Depositors

The DIC continued its work on increasing public aware-

• Bank Resolution, Crisis Management and Deposit

• The Third Americas Deposit Insurance Forum in Mexico City, Mexico, focusing on “Bank Resolution and Crisis Management: Beyond the

DEPOSIT INSURANCE CORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 19DDEEDEDEEEDEDEDEDEDEDEDEDEEPPOPOPOPOPOPOPOPPPPPOPPOSSSISISISIS TT T ININNIINININSUSSSSSSUS RARAARARANCN E COOOORRPPR ORORORAAATION N || 2202020181818 AAANNNNNNUAUAUAAL L LL REREEPOPOP RRTTTT & FININAANCIAL STATEMENTS 88 19

STRATEGIC FOCUS FOR 2019Increase Public Confidence in the Financial

Sector

• Advance efforts to expand deposit insurance

• Promote increased understanding of deposit

insurance through greater presence on digital

• Enlist greater participation by member institutions

• Implement a higher minimum target level for the

• Progress plans to formalize contingency funding

• Strengthen the data reporting framework for DIC

Strengthen Operational Readiness

• Develop a policy to feed into the national crisis

•

• Advance legislative amendments to transfer resolu-

• Promote corporate governance reforms, including through legislative amendments to stagger the

• Enhance the investment management framework

Strengthen Regulatory Efficiency and

Governance


PUBLIC AWARENESS CAMPAIGNInternational Association of Deposit Insurers, Core Prin-

“In order to protect

essential that the public be informed on an ongoing

insurance system.”-

lic awareness initiatives to raise public awareness of

own independent website, released brochures and decals to member institutions, launched a public awareness campaign, formed social media presence and ran various

-pleted to measure the effectiveness of the DIC’s public

Results from Awareness Surveys

The results revealed the need for increased focus on pro-viding public awareness education around the availability of deposit insurance coverage, with less emphasis on

suggest that when awareness was acknowledged, it likely predated any recent outreach activities by the Corpora-

Collaboration with Member InstitutionsThe member institutions play a critical role in promoting

Member Institutions to:

•

• Follow the DIC’s social media pages: Facebook,

•

• Advise customers of the DIC when opening bank

Media Advertising and Promotion The DIC’s advertising and promotion included a mix of traditional broadcasting and social media:

• Two existing infomercials placed in broadcast

• Airing of radio advertisements on popular radio

• Expansion of social media presence to Twitter

compliment Facebook page: Deposit Insurance

In order to protect

depositors and

contribute to

financial stability, it

is essential that the

public be informed

on an ongoing basis

about the benefits

and limitations of the

deposit insurance

system.


Calculate Insurance Coverage Use the DIC’s online Electronic Deposit

Insurance Calculator at:www.DIC.bs

Read more about the DIC online at: www.DIC.bsSend questions by e-mail to: [email protected]

Website:http://www.DIC.bs

• Depositors need not apply for insurance coverage; it is automatic, up to the pre-

scribed amount of $50,000, once a deposit account is opened at a member institution.

• Deposits held at different member institutions are separately insured.

• The DIC calculates the insured amount on both principal and interest balances.

• Opening several accounts in different branches of the same bank or at the same branch will not increase your insurance deposit payout.

• The DIC does not insure accounts or products in foreign currency; nor does it insure accounts held in banks or other institutions that are not DIC members.

• If a DIC member institution fails, the DIC will notify depositors by making official

announcements in the newspapers, as well as through notices at the premises of the failed DIC member. The DIC will indicate the dates, times and places at

which compensation will be made.

Did you know that…

Deposit Insurance CorporationP.O. Box N-4868Nassau, Bahamas

Head Office Location

Central Bank of The BahamasFrederick Street

Nassau, BahamasTel: (242) 322-2193 or (242) 302-2600

Fax: (242) 356-3909

To learn more about the DIC’s insurance regulations and procedures, kindly refer to the address listed below.

e made.

The DIC provides deposit insuranceprotection and support for Bahamian Dollar depositors,

contributing to the stability of the Bahamian financial sector through minimizing risk to depositors.

Your FundsSafeguarding

Promotional Literature

Flyer: 8.5”x11” Flyer: 3x8 card (front and back)

Trifold Brochure (outside view) Trifold Brochure (inside view)

YOU’RE COVERED!

Protection for your money. Guaranteed.

www.DIC.bs 242.322.2193/242.302.2615

That’s right. Thanks to legislation passed in 1999, your Bahamian dollar bank accounts are covered up to $50,000 by the Deposit Insurance Corporation.

Coverage is automatic once you have a Bahamian dollar (B$) account with a member bank.

All banks operating in B$ are required to become a member of the deposit insurance fund and pay an annual premium against their B$ deposits.

No need to hide your money under a mattress.

or other peril.

Deposit insurance offers you peace of mind. So if something were to happen to the bank, your B$ deposits are safe.

Ansbacher (Bahamas) Limited•

Bank of The Bahamas Limited•

The Bank of Nova Scotia Trust Company (Bahamas) • Limited

Citibank N.A.•

Commonwealth Bank Limited•

Fidelity Bank (Bahamas) Limited•

Finance Corporation of Bahamas Limited•

FirstCaribbean International Bank (Bahamas) Limited•

RBC Royal Bank (Bahamas) Limited•

Royal Bank of Canada Trust Company (Bahamas) • Limited

Royal Fidelity Merchant Bank & Trust Limited •

Scotiabank (Bahamas) Limited•

Member banks include:

The Bahamas’ Deposit Insurance Corporation (DIC) is a public corpo-ration, established under the Protec-tion of Depositors Act, 1999 (the Act). The DIC insures eligible deposits made with member institutions in case of their failure. The listing of the member institutions can be found at: http://www.DIC.bs

Pursuant to Section 4 of the Act, which came into effect from 10th November 1999, membership in the Deposit Insurance Fund (the Fund) is compulsory for every licensed bank with Bahamian dollar deposits.

The DIC insures only Bahamian dollar denominated deposits placed with a member institution in any of its branches in The Bahamas. Each eligible deposit in a member institu-tion is insured up to a maximum of B$50,000 per depositor.

Accounts covered by the DIC include checking, savings, demand and time accounts, and other accounts pay-able, for which a certificate, receipt, cheque, money order, draft or other payment instrument has been issued by the member institutions and for which the member is primarily liable.

Accounts not covered are letters of credit, standby letters of credit or instruments of a similar nature, sub-ordinated debts, preference shares, inter-bank deposits, foreign currency deposits, deposits of Government and statutory corporations, deposits of foreign governments, deposits in any financial institution wholly owned by the Government, deposits from affiliates of member institutions, and deposits of any depositor who is shown to have been a party to or profited from the circumstances given rise to a member institution’s failure.

DIC Insurance Coverage Limits by account ownership category

Deposit Insurance Coverage

Single Accounts The DIC covers amounts held in eligible accounts in the name of a single, individual depositor, up to the B$50,000 maximum insurable amount.

Joint AccountsIt is not uncommon for persons to have deposit ac-counts of more than one type and joint accounts in the same institution. Examples of joint account holders are married couples or a parent on behalf of a child. The DIC insures separately and collectively eligible deposits held in more than one name, i.e., joint accounts. For joint accounts, each account holder is assumed to have an equal share in the account, unless the records show otherwise. Joint accounts are insured up to a maximum of $50,000.

Trust Accounts There are cases where deposits/accounts may be held in trust. For example, a parent (the trustee) may establish a bank account at a member institution for his/her child (the beneficiary). Deposits held on the trust accounts are insured separately, with each beneficiary’s interest being insured up to a maximum of $50,000.

Deposit Insurance Fund A Deposit Insurance Fund (the Fund) has been established from premium contributions of DIC member institutions to cover potential claims, in the event that a member fails.

Beyond this accumulated pool, there is provision in the Act for the Minister of Finance (the Minister) to levy spe-cial contributions on members, should funding require-

ments exceed these amounts. The Fund is invested in safe and liquid assets, such as securities issued by the Bahamas Government.

Deposit Insurance Board of ManagementThe DIC is governed by a Board of Management, which is accountable to the Minister for its actions and decisions. The Board is comprised of the Chairman (theGovernor, Central Bank), the Manager of Bank Supervi-sion, another Manager of the Central Bank, the Finan-cial Secretary, and two (2) persons having knowledge and experience in banking, commerce, finance,accounting, insurance or law.

YOU’RE COVERED!

That’s right. Thanks to legislation passed in 1999, your Bahamian dollar bank accounts are covered up to $50,000 by the Deposit Insurance Corporation.

Coverage is automatic once you have a Bahamian dollar (B$) account with a member bank.

www.DIC.bs242.322.2193242.302.2615

All banks operating in B$ are required to become a member of the deposit insurance fund and pay an annual premium against their B$ deposits.

No need to hide your money under a mattress. You run no risk of it being

Deposit insurance offers you peace of mind. So if something were to happen to the bank, your B$ deposits are safe.

Protection for your money. Guaranteed.

Ansbacher (Bahamas) Limited• Bank of The Bahamas Limited• The Bank of Nova Scotia Trust Company • (Bahamas) LimitedCitibank N.A.• Commonwealth Bank Limited• Fidelity Bank (Bahamas) Limited• Finance Corporation of Bahamas Limited• FirstCaribbean International Bank • (Bahamas) LimitedRBC Royal Bank (Bahamas) Limited• Royal Bank of Canada Trust Company • (Bahamas) LimitedRoyal Fidelity Merchant Bank & Trust • Limited Scotiabank (Bahamas) Limited•

Member banks include:


Overview of the Domestic

Macroeconomic EnvironmentThe domestic economy maintained modest growth and continued to impact the strategic policies and practices

Domestic conditions strengthened modestly in compari-

and hotel accommodation and stopover visitors showing

by small to medium-sized foreign investment projects

these trends, the Department of Statistics’ Labour Force Survey reported improved labour market conditions with

MANAGEMENT DISCUSSION AND ANALYSIS

The monetary sector was dominated by contractions in liquidity and external reserves as credit growth contrasted

healthier economic environment, debt restructuring activ-

increased mainly due to reductions in bad debt provision-

Asset Growth and Quality

banks’ balances with Central Bank, a component in free

--

million while loans to public corporations experienced a

Real GDP Growth

Employment Indicators

Inflation


Within the sectoral distribution of private credit, personal

major reductions concentrated in agriculture, tourism, -

As to asset quality, private sector loan arrears decreased

respective reductions in commercial and consumer loan

-

Deposit Base and Liquidity

Based on the maximum insurance coverage per depositor,

Banks’ Total Assets

Private Sector Loan Arrears

Bank Liabilities

Bank Profitability Indicators


Profitability and Capital Adequacy

during the twelve months to September, which equaled to

- Central Bank requires that all banks maintain a capital

and to trigger steps to rebuild capital whenever the ratio --

tions remained well capitalized with commercial banks’

DEPOPOSIT INNNNNNNNSSSSSUSSUSS RARAANCNCCNCEEEEE E CCCOCOCCCOCOCOCOCORPRPORRRO ATAA IOON NN |||||| 202020202000002022 18181881818181818811 AANNNNNNNNNNNNNNNUAUAUAUUUAUAUAUAUUAUAAL LL L RERREREPPOPOPP RTRT &&&&&&& FFFFFINANCIALAL SSSTAATATETETEMEMEMENTNTSS 8824

The domestic

economy maintained

modest growth and

continued to impact

the strategic policies

and practices of

member institutions,

which affected their

financial results.

Commercial Bank’s Capital/Risk

Weighted Assets Total Provisions to NPL’s


Size and Allocation of the Fund

-

assets have been primarily due to rising interest income

The DIC continued to accumulate reserves through investments of annual premiums and reinvestment of

PremiumsWith growth in insurable deposits in the system, premi-

Investments & Interest IncomeInvestment activities remained subject to the powers in

government and quasi-government instruments and short-

In the meantime, the DIC’s interest income increased by

the only category of income-generating assets held by

2018 FINANCIAL HIGHLIGHTS AND ANALYSIS

Members’ Premiums (B$’000)

Deposit Insurance Fund (B$’000)

Investment Securites (B$’000)

Interest Income (B$’000)

DEPOSIT INSURANCE CORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 26 DEPOSIT INSURANCE CORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 826

Operating Expenditures

-

fees in the International Association of Deposit Insurers -

Operating Expenses (B$’000)

DEPOSIT INSURANCE CORPORATION | 2018 ANNUAL REPORT & FINANCIAL STATEMENTS 27DEDEEEEEDEDEDEDEDEDEDEDEEEDEEDEDEDEDEDEEPOOOOOPOOOOOPPOPPOOOOOPOPOPOPOSISISSSISSISIISISSISISSISISISISITTTTTTTTTTTTTTT TTT INNNININNNINNININNINNNNINININNINNNSUSUSUUUSUSUUUUSUSUSUUSUUUUSUSUSUUUSUSUSUUSURARRRRARARARAAAARARARARAARARRARARARARAARARAAANNCNCNCNCNNCNCNNNCNCNCNNNNCNCNCNCNNCNCNCN EEEEEEEEEEEEEEEE EEE COCCCCOCOOCOCOCOCOCOCOCCOCOCOORPRPRPRPRPRPRPRPRPRPRPRPPRPRPRPR ORORRORORORORORORORRORORORORORORATAATATATATTTTATATAATATATATATATIOOOOIOIOIOOOIOIOIOIOIOIOIONNNNNNNNNNNN N N N |||||||| 20202020202020220202 1881818181818118 AAAAAAAAAANNNNNNNNNNNNNNNNNUAUAAUAAUAUAUAUAUALLLL LLL LL RERERERERRREPOPOPOPOPOPOPOP RTRRTRTRTRTRTT &&&&&&&& FFFFFFFINIINNININANANAANANANANA CICICCICIALLALLALALAL SSSSSSSTATATTATATATATETETETETEETEMEMEMEMEMEMEENTNTNTNTNTNTNTSSSS8888 272727227272227

THE BAHAMAS’ BANK RESOLUTION REGIME

PROPOSED LEGISLATIVE AMENDMENTS

proposed reforms to strengthen the bank resolution regime and establish an appropriate legal and regulatory framework for early intervention and resolution of failed

The Bahamas is currently under a judicial approach which requires the appointment of a liquidator by the

as the liquidation process is usually protracted over

The DIC has consulted publicly and with the Ministry of Finance on legislative reforms that would shift The Bahamas to an administrative approach for early inter-

-tion and resolution powers would be transferred from the DIC to Central Bank of The Bahamas, where active prudential supervision and intervention in supervised

The proposed legislative amendments are inclusive, but not limited to, the following:

The reform would bring amendments to the followingprimary and subsidiary legislation:

• Responsibilities of the liquidation of a failed member institution to be removed from the Court and placed under the Central Bank as

• Transparent, established protocols would govern

• The DIC would retain the administrative responsibility for Fund’s operation and direct

• Resolution processes could involve the creation of a bridge bank arrangement to separate good assets

•

•

•

•


PRINCIPLE 1 – PUBLIC POLICY OBJECTIVES: The principal public policy objectives for deposit insurance systems are to protect depositors and contribute

public policy objectives

PRINCIPLE 2 – MANDATE AND POWERS:The mandate and powers of the deposit insurer should support the public policy objectives and be clearly

PRINCIPLE 3 – GOVERNANCEThe deposit insurer should be operationally independent, well-governed, transparent, accountable, and insulated

PRINCIPLE 4 – RELATIONSHIPS WITH OTHER SAFETY-NET PARTICIPANTS

stability, there should be a formal and comprehensive framework in place for the close coordination of activities and information sharing, on an ongoing basis,

PRINCIPLE 5 – CROSS-BORDER ISSUES: Where there is a material presence of foreign banks in a jurisdiction, formal information sharing and coordination arrangements should be in place among deposit insurers

PRINCIPLE 6 – DEPOSIT INSURER’S ROLE IN CONTINGENCY PLANNING AND CRISIS MANAGEMENT: The deposit insurer should have in place effective contingency planning and crisis management policies and procedures, to ensure that it is able to effectively respond

The development of system-wide crisis preparedness strategies and management policies should be the

deposit insurer should be a member of any institutional framework for ongoing communication and coordination

PRINCIPLE 7 – MEMBERSHIP: Membership in a deposit insurance system should be

PRINCIPLE 8 – COVERAGE:

credible and cover the large majority of depositors but leave a substantial amount of deposits exposed to

be consistent with the deposit insurance system’s public

PRINCIPLE 9 – SOURCES AND USES OF FUNDS:The deposit insurer should have readily available funds and all funding mechanisms necessary to ensure prompt reimbursement of depositors’ claims, including assured

the cost of deposit insurance should be borne by banks

IADI CORE PRINCIPLES FOR EFFECTIVE DEPOSIT INSURANCE SYSTEMS

As a member of the International Association of Deposit Insurers (IADI), the DIC models its policies, operations, governance and


PRINCIPLE 10 – PUBLIC AWARENESS:

stability, it is essential that the public be informed on an

deposit insurance system

PRINCIPLE 11 – LEGAL PROTECTION:The deposit insurer and individuals working both currently and formerly for the deposit insurer in the discharge of its mandate must be protected from liability arising from actions, claims, lawsuits or other proceedings for their decisions, actions or omissions

PRINCIPLE 12 – DEALING WITH PARTIES AT FAULT IN A BANK FAILURE:The deposit insurer, or other relevant authority, should be provided with the power to seek legal redress against

PRINCIPLE 13 – EARLY DETECTION AND TIMELY INTERVENTION: The deposit insurer should be part of a framework

The framework should provide for intervention before

PRINCIPLE 14 – FAILURE RESOLUTION:An effective failure resolution regime should enable the deposit insurer to provide for protection of depositors

PRINCIPLE 15 – REIMBURSING DEPOSITORS: The deposit insurance system should reimburse depositors’ insured funds promptly, in order to contribute

PRINCIPLE 16 – RECOVERIES: The deposit insurer should have, by law, the right to recover its claims in accordance with the statutory


GLOSSARY OF TERMSAccount Balance - The dollar amount including prin-

Assessment Base - The base on which the deposit insurer charges the premium or calculates the levy need-

Bank Draft - A cashable instrument, similar to a

against its own funds and payable to the person named in

Bank Run - A rapid loss of deposits precipitated by fear on the part of the public that a bank may fail and depos-

Beneficiary -either the bank account records or in a written trust that will have an interest in the trust upon the account own-

Bond - A debt instrument issued by a government, or

interest rates and may be redeemable on demand or at the

Bye-Law - A rule put in place by a corporation or or-

Checking Account - A deposit account that allows the depositor to write cheques instructing the member institution to withdraw funds from the account and pay

Claim - An assertion of indebtedness of a failed insti-tution to a depositor, general creditor, subordinated debt

Closed Institution - An institution: (a) which has been ordered by the Central Bank to suspend business as

(c) the failure of which the Central Bank has advised the

Corporate Governance - The system by which an organization is directed, administered or controlled, and includes the relationships among stakeholders and the

Deposit - Funds placed with a DIC member institution

Deposit Account Records - Deposit account records

passbooks, account ledgers and computer records that

Deposit Insurance - Deposit Insurance is a system established to protect depositors against the loss of their deposits in the event an insured institution of the deposit

Deposit Insurance Fund (DIF) - The fund main-tained by the DIC to insure deposits at failed member

Deposit Type - The type of transaction account or

Depositor - A person or entity (such as a corporation)

Eligible Deposits - Deposits that are eligible for

must be in a certain type of account or product (including

deposit account), held at a DIC member institution and in

Ex-ante (Before) Funding - The prior accumulation of a fund to cover deposit insurance claims, in case of the

Ex Officio -

Ex-post (After) Funding - An assessment levied after the failure of a DIC member institution to provide funds


GLOSSARY

Financial Safety Net - -anism that usually comprises the deposit insurance function, prudential regulation and supervision, and the

Flat Rate Premium - A premium assessed at a uni-

Individual Account - An account held in the name of

Insolvency or Insolvent - When a bank can no -

Insured Deposits - Types of deposits that are covered

Inter-bank Deposits - Deposits held in a bank for

Joint Account - A deposit account owned by two or more people, with equal withdrawal rights, that is not a

-

Lender-of-last-resort function - The provision of

Letters of Credit - Credit instruments issued by a bank guaranteeing payments on behalf of its customers to

the bank’s customer, for a stated period of time and when

Liquidation - The winding down of the business affairs and operations of a failed DIC member institution through the orderly disposition of its assets after it has

Maximum Coverage - The amount a depositor can claim from the deposit insurer in the event of bank fail-

Money Order - A cashable instrument, similar to a

institution or a postal authority and payable to the person

Partnership - An association of two or more persons or entities formed to carry on as co-owners of an unin-

corporation and unincorporated association accounts, are

Payout - The process undertaken by DIC to make deposit insurance payments to the insured depositors

insured depositors with new demand deposits at another DIC member institution

Subrogation - The process where the DIC is substitut-

Protection of Depositors Act – The Act passed by Parliament creating the Deposit Insurance Corporation,

Right and Capacity – -

as jointly owned funds, trust deposits, deposit held in

Uninsured Deposit – The part of an eligible deposit

may be able to recoup part of this amount upon the liqui-


FINANCIAL STATEMENTS OFDEPOSIT INSURANCE

CORPORATIONDecember 31, 2018





See accompanying notes. See Independent Auditors’ Report on pages 33 to 35.





















See Independent Auditors’ Report on pages 33 to 35.

Deposit Insurance Corporation

P.O. Box N-4868, Nassau, New Providence Bahamas

Head Office Location

Email: [email protected] | Website: www.DIC.bs

Central Bank of The Bahamas

Frederick Street, Nassau, Bahamas

Tel: (242) 302-2600

Fax: (242) 356-3909

ahamas

Bahamas

Documents

ANNUAL REPORT - DICD’DAndrd ea Rama see y, Ana lysst ; MsM. Chereryly For be s, Ass ista nt Lea d Su p e rvvisor ; Mr. Jee ro mme e Joh ns on , LeLe add Supp ere vivso r 10 DEPOSIT