By Erasmus Williams: Basseterre, St. Kitts, November 15, 2017 – One week after news broke that the Barbadian Victor Boyce, the Chief Credit Risk Officer at the St. Kitts-Nevis-Anguilla National Bank had tendered his resignation after three months into a three-year contract, the financial institution has become the focus of a number of financial concerns. The majority shareholder is the Government of St. Kitts and Nevis which owns 51 percent of the shares. The Government appoints the directors.
WINNFM reported Wednesday evening, it has obtained a document dated December 6, 2016, which emanated from the Eastern Caribbean Central Bank and was addressed to the National Bank.
The document reads, “The bank (National Bank) was assigned an overall composite risk rating of high. The examination identified areas requiring immediate remedial action. Corporate governance required improvement. There were deficiencies with the group structure and weaknesses such as: no independent directors; poor functioning of committees; absence of updated policies and procedures; and one director who does not meet the fit and proper criteria set out in part VIII of the Banking Act. In addition, there were some concerns regarding the oversight provided by the internal audit and risk review functions.”
The document further states, “Credit risk was high and the trend was increasing, due to the consistently high level of non-performing loans, which was 23.1 % of total loans as at 30 June, 2016, and significantly above the ECCB’s 5.0% tolerable. Weak credit risk management practices also contributed to the high level of credit risk.”
WINNFM noted that credit risk refers to the risk that a borrower may not repay a loan and that the lender may lose the principal of the loan or the interest associated with it. The risk arises because borrowers expect to use future cash flows to pay for current debts.
The WINNFM News Report further stated that the recent resignation of the Chief Credit Risk Officer, Victor Boyce, after just three months on the job, raises lots of questions as the document from the Central Bank zeroed in on credit risk management practices.
It reported that Boyce had initially signed a three year contract but his last working was November 3, 2017.
Other concerns that the Central Bank had with the St. Kitts-Nevis-Anguilla National Bank include high market risk, high operational risk, high level of unsatisfactory assets, which ties directly to the Land for Debt Swap initiative, non compliance with the Banking Act, banking regulations and the ECCB’s prudential standards.
The Central Bank’s assessment suggests that the possibility for an investor to experience losses due to factors that affect the overall performance of the financial market in which he is involved, is high.
The St. Kitts-Nevis-Anguilla National Bank was established in 1971, with the minimum EC$500,000 required to gain a banking license.
“When its founder, Sir Edmund Lawrence, left in 2012, the bank had accumulated assets worth EC$3.6 billion, or over 1 billion US dollars, according to informed sources. This makes the National Bank worth more than any of the top five Black-owned banks in the United States,” the report said.
WINN FM said it reached out the top executives of the National Bank but was unable to source a response up to press time.