Viability of DBSI questioned

Opposition MP, Rick Hou
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MEMBER of Parliament for Small Malaita, Rick Hou has raised concerns over the long-term viability of the Development Bank of Solomon Islands (DBSI).

The four areas Hou raised when debating on the $4 billion budget are:

  1. its capitalization: for DBSI to play its role effectively it needs to be adequately capitalized – at least $100 Million injection;
  2. Governance: it is critical that positions on the Board and senior management of the Bank are filled with individuals who pass the “proper and fit test” ;
  3. Political influence and pressure: this is a major reason for the downfall of the former DBSI.  

Hou said it is important that government must keep at an arms-length from the Bank.

“By the look of the current Board make-up, there may be cause for concern; iv) prudential financial management; the Bank management must maintain sound financial management.

“From the numbers provided by the Minister I am concerned that DBSI appears to be on a lending spree already,” he said.

Hou said out of the recent capital injection of $55 Million under the Economic Stimulus Package, the Bank has already lent out $58.3 Million by February this year.

“One would be concerned that sooner than its doors were opened for business, DBSI would be overleveraged already.

“Sir: Based on the foregoing observations, I strongly urge the CBSI to keep a close eye on DBSI to ensure normal prudential guidelines are observed by the Bank.  We don’t want to repeat the mistakes by the former DBSI,” he added.