ECCB cannot disclose bank examinations report, says governor

Governor of the Eastern Caribbean Central Bank, Timothy Antoine

BASSETERRE, St Kitts (WINN) — Questions pertaining to the credit risk management practices of the St Kitts Nevis Anguilla National Bank, raised in a leaked memo purportedly from the Eastern Caribbean Central Bank, remain unanswered as officials cited the confidential nature of such reports.

On Monday, WINN FM 989 sought clarification from the governor of the Eastern Caribbean Central Bank, Timothy Antoine, about the general practices of the ECCB in oversight matters.

“The Banking Act, which is what governs our engagement or relationship with commercial banks, our licenses, clearly provide for us to provide a role of regulation and supervision of all banking business in the currency union and as part of that business, we do onsite inspections, and offsite examination of banks.

“In other words we continually monitor the progress of banks, we look at a range of issues including profitability, asset quality and one of the key metrics of asset quality is non-performing loans.

“We look at liquidity; we look at risk management, corporate governance, a range of issues to ascertain the health safety of the bank, because ultimately our responsibility is to provide oversight for a safe and sound financial system,” Antoine explained.

He said the findings of the ECCB examinations are shared with the individual bank.

“What typically happens is after we’ve done these reports or these examinations, we would issue memorandums of understanding to the bank, its board and management, requesting them to take steps to improve or take corrective actions where necessary and that is normal procedure in all the bank supervision across the world. We would monitor progress with respect to the items or the issues that we’ve highlighted in the report.

“So whether that is for example your non-performing loans are high, give us your strategy, tell us how you plan to manage down your portfolio of non-performing loans or if we find that corporate governance is not strong enough, tell us how you’re going to improve your corporate governance and we try to put timelines around that, and manage and monitor implementation.

“So as we periodically check we’re able to ascertain whether or not there is progress against the areas we have identified for improvement, whether there are new and additional areas to focus on and whether or not we are satisfied with the progress that has been made,” he said.

Antoine also said that the ECCB has the mandate to sanction banks for non-compliance.

“The law is very clear we cannot disclose or discuss examination reports, that is between the regulator and the bank and so we cannot engage in any public discussion of any sort on specific issues raised with our respective bank our licenses, that’s very clear and for good reason because banks run on confidence and its very important that banks are in a position to address the issues without public discussion on every single item that they have to deal with.

The fact of the matter if we were to put these reports in the public domain, which we can’t by law, so let’s be clear about that, people are like to overreact with lack of full information.

In other words it is not unusual for a supervisor to write to a bank and point out areas for improvement, if you don’t know that, you might overreact and think the worst and take action which is unnecessary and frankly unhelpful or even hurtful to the bank and the financial system.

“So it is a standard operating procedure around the world that examination reports are not shared and not disclosed. Having said that, banks do have a duty of care to their shareholders, banks are required to publish annual reports that give a full education not just on their financial standing but also areas of other operations across the bank.

Usually at AGMs people have the opportunity, shareholders, to enquire of the management and the Board about performance and prospects for the bank. So there are opportunities for the shareholders and I suppose the general public in a sense, to engage the bank on its performance, but that is a mechanism that is set up not a public discussion or sharing of any examination report,” he said.

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The Montserrat Reporter - August 18, 2017

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Governor of the Eastern Caribbean Central Bank, Timothy Antoine

BASSETERRE, St Kitts (WINN) — Questions pertaining to the credit risk management practices of the St Kitts Nevis Anguilla National Bank, raised in a leaked memo purportedly from the Eastern Caribbean Central Bank, remain unanswered as officials cited the confidential nature of such reports.

On Monday, WINN FM 989 sought clarification from the governor of the Eastern Caribbean Central Bank, Timothy Antoine, about the general practices of the ECCB in oversight matters.

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“The Banking Act, which is what governs our engagement or relationship with commercial banks, our licenses, clearly provide for us to provide a role of regulation and supervision of all banking business in the currency union and as part of that business, we do onsite inspections, and offsite examination of banks.

“In other words we continually monitor the progress of banks, we look at a range of issues including profitability, asset quality and one of the key metrics of asset quality is non-performing loans.

“We look at liquidity; we look at risk management, corporate governance, a range of issues to ascertain the health safety of the bank, because ultimately our responsibility is to provide oversight for a safe and sound financial system,” Antoine explained.

He said the findings of the ECCB examinations are shared with the individual bank.

“What typically happens is after we’ve done these reports or these examinations, we would issue memorandums of understanding to the bank, its board and management, requesting them to take steps to improve or take corrective actions where necessary and that is normal procedure in all the bank supervision across the world. We would monitor progress with respect to the items or the issues that we’ve highlighted in the report.

“So whether that is for example your non-performing loans are high, give us your strategy, tell us how you plan to manage down your portfolio of non-performing loans or if we find that corporate governance is not strong enough, tell us how you’re going to improve your corporate governance and we try to put timelines around that, and manage and monitor implementation.

“So as we periodically check we’re able to ascertain whether or not there is progress against the areas we have identified for improvement, whether there are new and additional areas to focus on and whether or not we are satisfied with the progress that has been made,” he said.

Antoine also said that the ECCB has the mandate to sanction banks for non-compliance.

“The law is very clear we cannot disclose or discuss examination reports, that is between the regulator and the bank and so we cannot engage in any public discussion of any sort on specific issues raised with our respective bank our licenses, that’s very clear and for good reason because banks run on confidence and its very important that banks are in a position to address the issues without public discussion on every single item that they have to deal with.

The fact of the matter if we were to put these reports in the public domain, which we can’t by law, so let’s be clear about that, people are like to overreact with lack of full information.

In other words it is not unusual for a supervisor to write to a bank and point out areas for improvement, if you don’t know that, you might overreact and think the worst and take action which is unnecessary and frankly unhelpful or even hurtful to the bank and the financial system.

“So it is a standard operating procedure around the world that examination reports are not shared and not disclosed. Having said that, banks do have a duty of care to their shareholders, banks are required to publish annual reports that give a full education not just on their financial standing but also areas of other operations across the bank.

Usually at AGMs people have the opportunity, shareholders, to enquire of the management and the Board about performance and prospects for the bank. So there are opportunities for the shareholders and I suppose the general public in a sense, to engage the bank on its performance, but that is a mechanism that is set up not a public discussion or sharing of any examination report,” he said.