Central bank to incorporate offshore banks in financial stress tests

Monday, August 8, 2011

The Bahamas' central bank will incorporate offshore banks in the new stress test model for the financial system.

"While this exercise is currently limited to the domestic commercial banks, it is our intention to broaden the coverage to the high impact international firms," the bank's quarterly letter to officials was quoted as saying by local newspaper The Freeport News.

Other factors that will be included in the stress tests are banks' liquidity and interest rate risks.

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Earlier this month, the IMF mission to Bahamas said the country's banking system remains sound despite the volatility of its main trading partner, the US.

"The severe economic contraction during 2008-09 and high unemployment resulted in an increase in the ratio of non-performing loans, but stress tests have shown banks remained adequately capitalized," the IMF said in a statement.