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Assessment of Central Bank of The Bahamas’ Compliance and Effectiveness

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The Central Bank of The Bahamas (CBoB) plays a crucial role in maintaining the stability and integrity of the country’s banking system. This report provides an assessment of CBoB’s compliance and effectiveness in various areas related to banking regulation.

A. Banking Regulation and Supervision

Strengthening Supervisory Approach

The CBoB should consider strengthening its supervisory approach, including more frequent onsite examinations for systemically important financial institutions (SFI). This will help ensure that these institutions are operating within a stable and secure environment.

  • Public disclosure of reasons for removing a board member or Governor
  • Reassessment of the licensing framework for efficiency and effectiveness

Thorough Licensing Framework

CBoB’s licensing framework is thorough, but it may need to be reassessed for efficiency and effectiveness. This will help ensure that new institutions are properly equipped to operate within the country’s regulatory environment.

B. Licensing, Changes in Control, and Acquisitions

Robust Licensing Process

CBoB has a robust framework for assessing licensing applications, including financial strength of investors and fit-and-proper guidance for senior management.

  • Review, reject, or impose conditions on proposals for significant ownership changes in SFIs
  • Ensure that new institutions are properly equipped to operate within the country’s regulatory environment

C. Supervisory Cooperation and Cross-Border Supervision

Memoranda of Understanding (MoUs)

CBoB has memoranda of understanding (MoUs) with foreign regulatory authorities to support information sharing and cooperation during crises.

  • Introduction of a resolution regime will help bolster the Central Bank’s power to undertake recovery and resolution actions in a coordinated manner

D. Supervisory Approach

Risk-Based Supervision Framework

Certain aspects of CBoB’s risk-based supervision framework should be reassessed for efficiency and effectiveness.

  • Re-calibrate off-site surveillance program to include more frequent onsite examinations, especially for systemically important financial institutions (SFI)

E. Corporate Governance and Internal Audit

Principles-Based Supervision

Supervision of corporate governance has become a direct area of emphasis for CBoB.

  • Wide discretionary powers to select measures through which to require firms to address identified weaknesses

Overall, the report provides constructive feedback on areas where CBoB can improve its regulatory effectiveness and emphasizes the importance of strengthened supervisory approaches.