Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697647440945.pdf (Bahamas)
EXTRAORDINARY OFFICIAL GAZETTE THE BAHAMAS PUBLISHED BY AUTHORITY NASSAU 2"d March, 2012 (A) BANKS AND TRUST COMPANIES (LARGE EXPOSURES) (AMENDMENT) REGULATIONS, 2012 Arrangement of Sections Section --- - ------------- -- I.

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Citation ..... ..... .... ..... .... ... .. .

......... .... ..... .. ...... ........ .............. ... .... ... .. ..... .......... .......... 2 Amendment of Regulation 2 of the princ ipal Regulations ....... ..... ..... ...... ..... ... ..... .
2 Repeal and replacement of Regulation 3 of the principal Regulations ... ....... .. ..... .4 Amendment of Regulation 4 of the principal Regulations ... .... ......... .... .... ...... ...... 5 Amendment of Regulation 5 of the principal Regu lations ................ .. .. .. ........ .... .
.5 Repeal and replacement of Regulation 7 of the principal Regulations .. .. .......... .. .. 5 Amendment of Regulation 8 of the principal Regulations .... .. ............ .. .............. .. 6 Repeal and replacement of Regulation 12 of the principal Regulations ................ ?

Repeal and replacement of Regulation 16 of the principal Regulations .... ............ 7 MINISTRY OF FINANCE S.I .

No.
No.

26 of2012 BANKS AND TRUST COMPANIES REGULATION ACT (CHAPTER 316) BANKS AND TRUST COMPANIES (LARGE EXPOSURES) (AMENDMENT) REGULATIONS, 2012 ' The Governor of the Central Bank of The Bahamas, in exercise of the powers confe rred by sectio n 24 of the Banks and T rust Companies Regulati on Act, makes the following regulations- 1.

Citation.
Citation.

These Regulations, which amend the Banks and Trust Companies (Large Exposures) Regulations', may be cited as the Ban sand Trust Companies (La rge Exposures) (Amendment) Regulations, 2012.

2.

Am endment of regulation 2 of the principal Regulations.
Regulation 2 of the principal Regulations is amended by - (a) the repeal and replacement of the words "capital base" together with the accompanying definition as follows - ''"capital base" means the total of shareholders' fund s plus other capital items permitted by the Central Bank and subject to any adjustment or deduction required by the Central Bank and reported the most recent Statement of Cap ital Adequacy schedule of the Excel Reporting System or in such form as determined by the Central Bank;"; in (b) the repeal and replacement of the word "exposure" together with its accompanying definition as follows - ""exposure" means - (i) claims on a counterparty including actual claims and potential claims which would arise from the drawing --··- -·- -·-·- - - -- -- - - -- 'Sub.
Leg: Vo!V; Ch.

316-24 Page- 2 down in full of undrawn advised facilities.
whether revocable, irrevocable, conditional or unconditional , which the licensee has committed itself to provide and claims which the licensee has committed itself to purchase or underwrite: (ii) contingent liabilities arising in the nom1al course of the business and drawing down ofundrawn advised facilities; liabilities that would arise from (iii) holdings of equity capital, bonds, bills or other financial instmments; (iv) any other assets counterparty by included in sub-subparagraphs (i), (ii), or (iii);": that constitute a claim on a licensee and which are not the (c) the repeal and replacement of the word " licensee" together with its accompanying definition as follows -··- ""licensee" - (i) (ii) means any bank or Is incorporated in The Bahamas and holds a licence granted under section 4 of the Act; and trust company which include nominee does not tmst companies and restricted banks and or trust companies whose operations are limited to conducting business either on behalf of clients who arc members of the same family or for specified persons which are named the licence;"; in (d) the repeal and replacement of the words "Zone A countries'' together with the accompanying definition as follows - '"'Zone A countries" means any country which is a full member of the Organization and Development together with any country which has concluded lending arrangements with the International Monetary Fund associated with the General Agreement to Borrov .. · but excludes those countries - for Economic Co-operation (i) which have rescheduled their external debts during the preceding five years; (ii) whose rating in currencies is lower than investment brrade; and long-tenn liabilities for foreign (iii) which have no rating and whose yield to maturity and remaining duration are not comparable with those of long-term liabilities with an investment grade rating;"; Page - 3 (e) (f) (g) the amendment of the definition of the words "related party" by the deletion wherever it appears of the word "above''; the deletion of the words
 "connected party" together with the accompanying definition; the insertion in the appropriate alphabetical order of the following words and definitions -- ""control" means the power, whether arising from ownership, contract, guarantee, agreement, or otherwise, whereby one person can direct the affairs of another; "group of connected parties" means two or more individual counterparties that constitute a single risk and includes - (i) (ii) any party that, either directly or indirectly, controls the coun terparty; any party that is controlled, either directly or indirectly, by any party that controls, either directly or indirectly, the counterparty; (iii) a subsidiary or associate company of the counterparty; (iv) dtt..:ctors, staff, contro\ling shareholders, of the counterparty; and executive officers, senior and (v) executive otlicers, and directors, controlling shareholders, of any person identified in (i), (ii) and or (iii); senior staff, "l.()ne A banks" means banks that are located in Zone A countries; "Zone A central banks" means central banks located in Zone A countries; "Zone A central governments" means central governments located in Zone A countries; "Zone B central banks" means central banks located in Zone B countries; "Zone B central governments" means central governments located in Zone B countries; '"Zone B countries" means those countries which are not included in Zone A.'
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3.

Repeal and Regulations.

replacement of Regulation 3 of the principal Regulation 3 of the principal Regulations is repealed and replaced as follows --· · "3.

Single Exposure Limit.

Page- 4 (1) No licensee shall incur exposures, on an aggregate basis, to any individual counterparty or group of connected parties, which exceed twenty-five percent of the licensee's capital base.
(2) No licensee shall hold non-capital investments in securities of a single issuer which exceed ten percent of the licensee's capital base.".

4.

Amendment of Regulation 4 of the principal Regulations.

Regulation 4 of the principal Regulations is amended- (a) by the repeal and replacement of paragraph (I) as follows - "( 1) No licensee shall incur exposures to its related parties which in aggregate exceed fifteen percent of the licensee's capital base.
"; and (b) in paragraph (2) --- (i) (ii) by the deletion of the word "arms" and the substitution of the word "arm's"; and by the insertion in sub-paragraph (a) immediately after the semi-colon, of the word "and''.

5.

Amendment of Regulation 5 of the principal Regulations.

Regulation 5 of the principle Regulations is amended by the deletion of the word "concessionary" and the substitution of the word "concessive".

6.

Repeal and Regulations .


replacement of Regulation 7 of the principal Regulation 7 of the principal Regulations is repealed and replaced by the following ... - "7.

Exempt Exposures.
The following exposures shall be exempt from the limits outlined in regulations 3, 4 and 6 - (a) (b) (c) exposures to the Government of The Bahamas and non-commercial Bahamian governmental institutions or secured by securities and or guarantees of the Government of The Bahamas; exposures to Zone A central banks; exposures to Zone A central governments which are rated high grade or higher by two of the major credit rating agencies for foreign currency debt; Page- 5 (d) (e) (t) exposures secured by securities and or guarantees from Zone A central governments which are rated high grade or higher by t\vo of the major credit rating agencies for foreign currency debt: short-term interbank deposits of not more than six months maturity, booked with Zone A banks; and exposures which are fully collateralized throughout their tenure by cash deposits, including certificates of deposit and equivalent instruments the lending bank, held by the lender with the specific right of offset, where the release of the deposit is conditional on the repayment of the related extensions of credit.".
issued by 7.

Amendment of Regulation 8 of the principal Regulations.
Regulation 8 of the principal Regulations is amended-- (a) (b) by re-lettering the existing sub-paragraph (a) as sub-paragraph (b); by the insertion of a new sub-paragraph (a) as follows ·- ""(a) exposures to Zone B central governments and central banks which are denominated in the country's local currency and funded by liabilities in the same currency rated high grade or higher by two of the major credit rating agencies for foreign currency debt;"; (c) by the repeal and replacement of the existing sub-paragraphs (b).
(c), (d) and (e) as follows-- ""(c) exposures which are supported by a parental guarantee acceptable to the Inspector; (d) underwriting exposures which do not exceed 90 days duration .
Any residual holdings of securities, which are held for more than 90 days, shall not be treated as exempt and shall be subject to the limits outli ned in regulations 3, 4 and 6; (c) off-balance sheet exposures to banks which are acceptable to the Inspector; and (f) exposures to related parties where the licensee or the related party is fulfilling a treasury role on behalf of the group or managing liquidity across the group and the conditions set by the Inspector have been met."

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\ 8.


Repeal and Regulations.

rep lacement of Regulation 12 of the principal Regulation 12 of the principal Regulations is repealed and replaced by the following - "" 12 Notification of breach.

A licensee shall.
A licensee shall.

on becoming aware of any breach of regulations 3, 4 or 6 (a) (b) notify the Inspector and provide the particulars of the breach in the manner determined by the Inspector within two working days after breaching the regulations; and take immediate action to bring the exposure within the established limits as soon as practicable but no later than ten working days after breaching the limits.".

9.

Repeal and Regulations.


repl acement of Regu lation 16 of the principal Regulation 16 of the principal Regulations is repealed and replaced by the following --· "16 Penalty for non-compliance.

(I) (2) Subject to paragraph (2), the Central Bank may impose a fine not exceeding five thousand dollars where a licensee fails to comply with the provisions of any of regulations 3, 4, 6, 11 or 12.

The Governor may, if he thinks fit, exempt a licensee from the provisions of this re.~:,JU!ation.''.
Made this 2"d day of March, 20 12.

Signed WENDY CRAIGG Governor of the Central Bank of The Bahamas Page - 7 BANKS AND TRUST COMPANIES (LIQUIDITY RISK MANAGEMENT) REGULATIONS, 2012 Arrangement of Sections Section - -- -- - -------- -· .

- -- - ·- -·-··- Citation ...... .. ............. .. ........................................... .... .. ....... .. ............ .. ..... ....... ........ 2 1.
Interpretation .................. ........ .. ............ .. .................. ......... ........ ........ .... .. .. ..... ........ 2 2.

Liquidity risk management strategy .. .. .... .......... ................. .... ... ..... .. ................. .... .4 3. Review of liquidity risk management strategy .. .. ..... .. ............ .. ............................ .4 4.

Inspector to receive copy of liquidity risk management strategy ....... ... ..... ...... .. .. .4 5.
Licensee to maintain liquidity ratio ........... .. ..... .... .. .. ....................... .... ....... .. ... ...... 5 6.

Calculation of liquidity ratio ......... .. .. ... .. ......... ..... ...... .......... .... ....... ..... .... .. .. ... ....... 5 7.

Central Bank to monitor liquidity position of licensees .......... .. ........ ... ............ ..... 5 8.

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Provision oflnformation to the lnspector ................. .. .. ... ................................ ...... 5 I 0.
Licensees to enter discussions with the Inspector ... .................. .. ....... .... ................ 5 11.

Remedial action .................... .. ........ .. ..... ................... .. ... .... .... ............... .............. ... 6 12.

Liability for non-compliance ........... .... .... ....... ... .... ... ........................ ........ .. .......... .
6 Fines ....... ............... ... .... ......... .... .. .. .... .. .... ........ ......... .. .... .................. .. ........... .... .... .

6 13.

Exemption .

............ ... ............... ........ ............................... .. .... .................. ......... ...... 6 14.

S.l.

No .
S.l.

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27 of2012 BANKS AND TRUST COMPANIES REGULATION ACT (CHAPTER 316) BANKS AND TRUST COMPANIES (LIQUIDITY RISK MANAGEMENT) REGULATIONS, 2012 The Governor of the Central Bank of The Bahamas, in exercise of the powers conferred by section 24 of the Banks and Trust Companies Regulation Act, makes the following regulations - 1.

Citation.

These Regulations may be cited as the Banks and Trust Companies (Liquidity Risk Management) Regulations, 2012.

2.

Interpretation.
2.

Interpretation.

(I) In these Regulations- "Act" means the Banks and Trust Companies Regulation Act (Ch.
31 6); "freely convertible foreign currency" means any foreign currency which, at the time in question, is in the opinion of the Central Bank freely negotiable and international exchange transferable on markets; "licensee" means any public bank and or trust company which is incorporated in The Bahamas and holds a licence granted under section 4 of the Act; "liquid assets" means - (a) cash, including notes and coins held together with precious metal coins, which qualify as legal tender; (b) gold and silver bullion and other precious metals; (c) market loans, and includes·- Page- 2 (i) balances with, and loans and advances to, Zone A banks including correspondent or clearing balances and committed facilities with residual maturity up to one hundred and eighty days; (ii) money at call and demand balances at Zone A banks held in Bahamian dollars and or freely convertible foreign currency; (iii) negotiable paper issued by Zone A banks, including negotiable certificates of deposits, promissory notes and other negotiable paper; (iv) bills, including-- (A) bills accepted by Zone A banks; (8) public sector bills including Treasury bills and notes and other negotiable paper issued by Zone A country central governments, any other bills guaranteed and or underwritten by Zone A country central governments, or any other bills that constitute an obligation of a Zone A country central government; (v) marketable Zone A country central government (vi) securities; and any other asset designated for the pw-poscs of these Regulations by the Inspector; "liquidity" means the ability to fund increases in assets or meet collateral obligations at a reasonable cost as they fall due without incurring unacceptable losses; "liquidity ratio" means the ratio of the sum of a licensee's liquid assets, in all currencies, expressed as a percentage of the sum of its deposit liabilities in all currencies; "money at call and demand balances at Zone A banks" means money at call and demand balances placed with Zone A banks less money at call and demand
 balances received from those banks; "Zone A bank" means a bank located in The Bahamas or in a Zone A country whose credit rating is investment grade and excludes- (a) any bank whose credit rating has been downgraded to lower than investment grade in the preceding twelve months; or any bank which has no rating; (b) "Zone A country" means - (a) The Bahamas; Page- 3 (b) (c) a country that is a full member of the Organization for Economic Co-operation and Devel opment; a country which has concluded special lending arrangements with the International Monetary Fund associated with the General Agreement to Borrow, and excludes - (i) (ii ) a country which has rescheduled its external debt during the preceding fi ve years; a country whose rati ng for long-term liabili ti es in foreign currencies is lower than investment grade, or which has no rating, and whose yield to maturity and remaining duration are not comparable with those o f long-term liabilities with an investment grade rating; "Zone A country central government" means the central government of a Zone A country.
(2) Words not defined in these Regulations shall, unless the context otherwise requires, have the same meaning ascribed to such words in the Act.

3.

Liquidity risk man agement strategy.

A licensee shall establish and maintain a liquidity risk management strategy appropriate to the nature , scale and complexity of its activities.

4.

Revi ew of liquidity risk management strategy.


A licensee shall ··- - (a) (b) implement and adhere to its liquidity risk management strategy at all rimes; and review on a regular basis, and at a minimum annually, its liquidity risk management strategy to take account of changing business objectives, strategic direction and the overall risk tolerance of the licensee.

5.

Inspector to receive copy of liquidity ris k management strategy.
(I) A licensee shall provide the Inspector with a copy of its liquidity risk management strategy.

(2) A licensee shall, where any change to a licensee's risk management strategy has been approved by its Board of Directors, notify the Inspector of such change within fourteen days of the Board's approval and provide the Inspector with a copy of the revised risk management strategy.

Page- 4 6.

Licensee to maintain liquidity ratio.


( 1) (2) Subject to paragraph (2), a licensee shall maintain a liquidity ratio of not less than twenty per centum.

Paragraph ( 1) shall not apply to a licensee which is subject to the provisions of sections 19 and 20 of the Central Bank of The Bahamas Act (Ch.

351) .

7.

Calculation of liquidity ratio.


The Inspector may, for the purpose of calculating the liquidity ratio of a licensee, require by notice in writing to the licensee that the liquidity ratio of the licensee be calculated - - (a) (b) either on a consolidated or unconsolidated basis; or on both a consolidated and unconsolidated basis.

8.

Central Bank to monitor liquidity position of licensees.
(I) (2) The Central Bank shall monitor the liquidity position of each licensee on is being an ongoing basis appropriately managed based on the nature, scale and complexity of the licens !e's activities.

itself that the liquidity risk to satisfy The r~entral Bank shall, with respect to licensees which are subject to sections 19 and 20 of the Central Bank of The Bahamas Act (Ch.

351), monitor the liquidity position of such institutions as a whole, both on and off the balance sheet and across all currencies.
9.

Provision of Information to the Inspector.

A licensee shall - (a) (b) provide the Inspector with such particulars of its liquidity position in such manner, frequency and form as may be specified by the Inspector; inform the Inspector forthwith of any concerns it has about its current or future liquidity position as well as plans to address such concerns.

10.

Licensees to enter discussions with the Inspector.


A licensee and the Inspector shall, where the licensee is in breach of paragraph ( 1) of regulation 6, enter into discussions for the purpose of determining what remedial action is required.

Page - 5 11 .

Remedial action.

The Inspector may issue a written directive requiring a licensee to take such remedial action as the Inspector deems appropriate to ensure compliance with parab>Taph (I) of regulation 6.

12.

Liability for non-compliance.


A licensee which fails to comply with a directive of the Inspector made under regulation 11 shall be liable to a fine.

13.

Fines.

The Central Bank may, where a licensee is in breach of regulations 3, 4, 5( 1 ), 5(2), 6( I), 9, and or 11, impose a fine of up to $5,000 per breach.

14.

Exemption.

The Central Bank may, if it thinks fit, exempt a licensee from the provisions of these Regulations.

Made this 2"d day of March, 2012.


Signed WENDY CRAIGG Governor of the Central Bank of The Bahamas Page- 6