Two large Bahamian banks could be undercapitalised in the event of a severe economic downturn, International Monetary Fund stress tests reveal.
If hit with the “perfect storm” scenario, the banks’ capital levels could fall below the 14% capital adequacy ratio, the fund finds. The two banks account for 15% of the Bahamian system’s assets, the report says.
The perfect storm scenario simulates the effects of a US recession coinciding with a major hurricane. In the scenario, GDP would contract by