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Friday, June 19, 2009
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Cash calling stakeholders to Development Bank discussion By VERNON CLEMENT JONES ~ Guardian Business Editor ~ vernon@nasguard.com: Now is, indeed, time for a frank discussion on the future of the Development Bank, says the chair of the government-backed lender — commenting on administration suggestions that future may be short-lived. "This is a good time for there to be a broad-based discussion of the Development Bank's future," Darron Cash told Guardian Business yesterday. "That's a discussion that ought to take place among all the stakeholders.... The organization is at a crossroads exactly as the minister has alluded to in his remarks. The board director references the same 40 percent default rate Minister of State for Finance Zhivargo Laing did in the House Wednesday. He was speaking to government's "urgent" need to address the bank's functioning and future. "When we came to office, we provided a three to six months grace period to clients of the Bank to come in to work out arrangements for settling their accounts as opposed to the bank foreclosing on their properties," said Laing. "This did not produce the results expected. The bank's loan defaults continue to be as high as 40 percent or more. We will, as a matter of some urgency, have to make very fundamental determinations about the future course of the bank and the bank's board and the government are giving weighty consideration to such determinations." It's worrying talk, say two small business advocates, yesterday expressing real concern the lender of first and last resort for many "grassroots" entrepreneurs could be retired after 30 years on the job. The potential loss is especially troubling given commercial lenders in this jurisdiction have largely failed to deliver on promises to significantly beef up small business lending. As of last April, RBC, for example, had yet to bring together under one roof personnel for its own unit — that more than a year after a highly-publicized launch. While acknowledging his bank's pivotal lending function, Cash — like the government — asserts the institution is unsustainable in the long term. He points not only to its default rate but also the $1m in government support his institution is allotted annually, money effectively subsidizing the relatively low interest rates offered clients. The government — just like its counterparts across the developing world in their respective countries — acts as guarantor some of the loans on its book. "It's for the people to decide" whether that spending represents value for money, he told Guardian Business. Last year the bank directed a media blitz at the public, focused, as Laing said, on bring delinquents in to settle past-dues. It was a bust. Critics charge successive governments have simply lacked the kind of political will necessary to foreclose on the homes of deadbeat borrowers, both at the bank and also at its Mortgage Corporation. Cash argues any discussion of his institution's future must include a thorough examination of its qualifying terms and just how far it must be prepared to go in collecting bad debt. Still, the same kind of negative optics associated with mass repossession may ultimately prevent the administration from dismantling an institution credited with helping poor and black Bahamians claim even a portion of the country's business ground.
Friday, June 19, 2009 |
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