After the banking sector experienced a "challenging" 2016, the Central Bank of The Bahamas (CBOB) Banking Supervision Department (BSD) quarterly letter outlined the regulator's objectives and plans for 2017.
The BSD pointed out that, of the many challenges faced by firms in 2016, "the macroeconomic risks on a global scale, continued regulatory pressures and cyber security have been some of the more impactful and concerning trends". The regulator admitted there is "no doubt" those challenges will continue into 2017.
"Given the emerging and continuing risks - strategic or tactical - the bank's supervisory and regulatory work plans for the year are built on the cognizance of these indicators and the industry's measures to manage and mitigate the underlying risks," said BSD.
The department explained it would continue to "progressively" phase in Basel III capital and liquidity standards in an effort to maintain global regulatory standards.
"The top priority of global regulatory bodies has been ensuring that international financial institutions can weather financial and economic stresses," said CBOB.
"The future stability of the global banking sector depends, in part, on international standard setters completing their regulatory reform agenda and ensuring its implementation.
"The Central Bank has rolled out the capital component of the Basel III framework, and in 2017 will focus on implementing other elements, namely, the capital buffers, the leverage ratio, the net stable funding ratio and the liquidity coverage ratio. It should be noted that the Basel implementation timeline with respect to these ratios extends to 2018. As has been our practice, we will continue to engage the industry and seek your feedback on any new or revised guidelines stemming from this work stream."
The Central Bank noted that, against the backdrop of increased funding requirements for new capital and liquidity, "the sector has endured a challenging 2016".
"Over the past few years, many of the structural shifts in the banking environment have continued to impact the traditional business and operating models of our licensees, resulting in consolidation of banking entities through mergers and acquisitions or changes in beneficial ownerships, portfolio sales, asset transfers, constraints on access to correspondent banking, outsourcing and restructuring," CBOB added.
BSD contended that the various segments of The Bahamian banking sector appear to reflect these global markers.
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