Banker Babe Contributor
To my knowledge (having been in banking since the early ’70’s) the only bank that failed was the Guyana National Cooperative Bank, GNCB.
This bank was doing very well for a good many years but failure was inevitable as it was Government owned and often politicians would advise the qualified bankers, how to execute the business of banking.
The loan portfolio dictates the profitability of any bank and the demise of this bank was due mainly to bad debts. Way too often, loans were extended to ‘friends’ and in most cases without security. Recovery of these bad debts were slim to non existent and the bank incurred losses. Banking rules were too lax and that, with mismanagement, soon took its toll.
After it failed, the bank was acquired by Republic Bank Limited, RBL. RBL also took some of the staff and it was noted that the Credit staff was very knowledgeable with the lending process, so what went wrong?
These staff were also well educated so there was no apparent reason why the bad debt portfolio was so high.
The only reason I can come up with is that loans were extended to all and sundry totally ignoring / assessing the high risks that were attached to such advances.
The other commercial banks were doing well so the above seems to have definitely been the problem.