By Horace Mills, BVI News Online Staff
In what has been presented as a rescue effort for the National Bank of the Virgin Islands, lawmakers yesterday approved a bill that will enable statutory bodies and other companies incorporated locally to invest in the government-owned bank.
The current legislation allows Government to be the bank’s only shareholder. But lawmakers on both sides of the political divide have agreed that Government is not in a position to give the bank the level of capital it needs for a quantum leap.
That is why Premier and Minister of Finance Dr D Orlando Smith went to the House of Assembly yesterday, May 11, to facilitate more shareholders, through amendments to the Development Bank of the Virgin Islands Transfer of Assets and Liabilities Act.
Even if more shareholders become involved, Government will continue to hold majority shares in the bank, according to Premier Smith.
“The bank needs to be capitalized more heavily because it is quite restrictive now by the level of capitalization – and the loans which are already on the books. And so the purpose is to be able to make it possible to have at least one other shareholder in the bank or two [other shareholders]. By doing so, it will increase its capitalization and its ability to deliver more services to the people,” added Premier Smith.
He explained how the National Bank – formerly the Development Bank of the Virgin Islands – has evolved. For example, the entity was made a commercial bank on paper in 2005, but it’s not quite a commercial bank in reality. “It is taking some time to get from there (being declared a commercial bank) to really being ready to become a commercial bank. I know that much work has gone on especially since 2012, and I think the bank is ready to move upward…,” the premier further told the House.
He noted that, despite the challenges faced, the National Bank has remained true to one of its most fundamental founding principles – social development. It, among other things, holds the government’s National Business Bureau and scholarships.
Minister of Health and Social Development Ronnie Skelton, in his contribution to the debate, suggested that it is time for the bank to do or die.
“The government must do what it needs to do and should do in order to make this bank a viable institution. I think, as I speak now, the bank has over $100 million worth of depositors’ money – if it doesn’t have more. So we must protect this bank. The government does not have the capacity to capitalize this bank,” Skelton trumpeted.
He further noted that, over the years, both local and international institutions have expressed concern about issues such as the viability of the National Bank.
“If the government continues to hold all the shares and don’t put money in the bank, it will continue to be a negative mark in the financial services regulatory division… There is a feeling, and there is a business plan that the bank can work. I am sure there will be dividends paid to these institutions for their investments [as shareholders in the bank,” Skelton further told the House.
He indicated that the government’s current capitalization of the National Bank – as the sole shareholder – is about $25 million to $27 million.
Leader of the Opposition Andrew Fahie, in the meantime, said the National Bank should never be used as a political football, and should never be allowed to lose its “common touch” despite its need to become more involved in “modern things”.
He also suggested that the bank’s future shareholders should be belongers of the British Virgin Islands (BVI). Fahie is concerned that, based on the bill, any company incorporated under the BVI Business Company Act 2004 can become a shareholder.
“Once you are registered here, you are known as a BVI company. But there are BVI companies and there are BVI companies; this is my concern,” Fahie said. He continued: “Next thing we hear is 40 percent of the bank is gone to a company that is considered to be a BVI company, but really is not. So we have to put some safeguards in there; I don’t know if they will come in as policy, but we have to be mindful.”
Fahie further raised concern that the bill to facilitate more shareholders becoming involved in the National Bank was being rushed through the House of Assembly. In fact, the said bill was introduced, and all three readings done in a single sitting of the House.
The social development minister, Skelton, told Fahie: “Time is of the essence here.”
The bill, which Fahie supported generally, was passed with amendments a few hours after nightfall yesterday. Before it becomes law, it must be approved by the Governor and published in the Virgin Islands Gazette.
Copyright 2021 BVI News, Media Expressions Limited. All Rights Reserved. This material may not be published, broadcast, rewritten or distributed.