Former Central Bank governor James Smith is "looking forward to being a part of the process" of realizing a return for the Bahamian public on the bad debt acquired by Bahamas Resolve Ltd. from the Bank of The Bahamas on October 31.
Smith was named in the House of Assembly on Wednesday as the head of the Board of Directors of Resolve, but had yet to meet with the government to get his marching orders when he spoke with Guardian Business.
He spoke about the company's ability to collect on a loan that is considered non-performing.
"The ability to make good on the collateral, for instance: you can be in arrears, but let's say you own a hotel on Paradise Island, and you just don't find a buyer for that within 90 or 180 days. The collateral may be more than sufficient, but the bank in this instance has to remove all of the bad debt off the books in order to comply with the regulator."
"If they didn't run into this problem," he said, "it doesn't follow that they couldn't actually realize these loans over time."
Smith was reluctant to speak in specifics until he sees the underlaying assets, the terms of the loans, etc.
"This exercise may be new to The Bahamas, but this is what they've been doing (recently in the global financial arena). So there's a lot of precedent for it," he said.
Smith noted that the Bank of The Bahamas was an important part of the banking system in The Bahamas, and that having gotten itself into trouble, it needed to find a way out of that trouble. The creation of Resolve was the way out.
"It tells you on one hand that the support (of the Bank of The Bahamas) is very real from the government's standpoint. Secondly, that the institution is regarded as a very important part of the financial services sector, and thirdly, it also recognizes the importance of compliance with the Central Bank as regulator."
"I'm looking forward to being a part of that process that -- if even partially successful -- will go some way towards playing a small role in keeping the (Bank of The Bahamas) alive and hopefully at the same time reducing the burden to the taxpayer, who would be the ultimate payer in something like this."

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