Financial Compliance in Antigua and Barbuda: A Detailed Assessment
The financial landscape of Antigua and Barbuda has undergone a rigorous examination through the Basel Core Principles for Effective Banking Supervision. This comprehensive assessment provides insight into the island nation’s compliance with international banking standards.
Banking Sector Concentration
A notable aspect of the country’s banking sector is its high degree of concentration, with the largest bank accounting for 61 percent of the aggregated assets. This concentration raises concerns about:
- Risk Management: Investment portfolios dominate the banks’ asset base, primarily consisting of government and corporate bonds, as well as equities.
- Large Exposures: Some large exposures exceed 25 percent of capital, which can compromise the integrity of loan portfolios.
Connected Party Loans: A Risk Factor
Connected party loans are another area of concern, as they can:
- Compromise Loan Portfolios: Create potential conflicts of interest
- Undermine Governance and Risk Management Practices
The assessment highlights the need for improved governance and risk management practices to mitigate these risks.
Recommendations for Reform
Strengthening capital adequacy requirements, enhancing market risk management, and promoting transparency in lending practices are essential steps towards achieving compliance with international banking standards. By implementing these reforms, Antigua and Barbuda can:
- Enhance Reputation: As a responsible offshore financial center
- Maintain Investor Trust: Ensure the trust of international investors
This detailed assessment provides a roadmap for the country’s authorities to address the identified weaknesses and ensure that the banking sector operates in a safe and sound manner.