The economic downturn is expected to last for the next 18 to 24 months, but Bermuda’s banks are healthy enough to ride out the duration. This, according to a panel of the Island’s top banking executives at yesterday’s Bermuda Monetary Authority International Regulatory Forum.Butterfield Bank CEO Brad Kopp, Capital G CEO John Kephart, HSBC Bermuda CEO Richard Moseley and BMA banking director Marcia Woolridge Allwood gave their thoughts on the future of the economy and challenges they faced.“It is fortunate that our banking industry is ready to go when the economy improves,” said Mr Kopp. “We have money to lend, we have the capital, we have the liquidity and we have the credit quality. And I’ve never seen an economy turn around without a healthy bank industry, so I’m quite optimistic as we look forward.”Ms Woolridge Allwood supported Mr Kopp’s view by saying that the the tier one (high quality) capital to risk assets ratio of the Island’s banks stood at 23.3 percent, well above international regulatory requirements, and “that will have our banks moving into the Basel III environment, already well capitalised and ready to meet those standards”. Basel III is a new global regulatory standard, based on levels of bank capital and liquidity.“When the taxi driver reads the paper tomorrow, when the teacher reads the paper tomorrow, the person who owns the restaurant tomorrow, they’ll be pleased to know that the banking industry is healthy,” added Capital G CEO Mr Kephart. “One of the issues that we have to remain focused on is how do we work within the economy we have and improve the lives of the folks that are here.”While the BMA sees the current economic situation extending for the next 18 to 24 months, they believe there are some glimmers of hope, referring to their announcement that 41 new insurers registered in Bermuda so far this year, compared to 31 registrations for the same period last year, representing a 32 percent increase.These figures include two Class 4 insurers, Signal Risk Insurance Ltd and Brookfield Life and Annuity Insurance Company Ltd. According to the BMA, these are the first Class 4 insurers domiciling here since 2008.While admitting that they haven’t seen similar numbers of incorporations by asset managers, BMA said there are ongoing initiatives addressing that market.Aside from the economy, low interest rates, keeping up with the pace of regulation, credit risks and availability of relevant talent are also just some of the issues the local banking industry is facing.The ongoing low interest rates have been a significant challenge to the industry, with the panellists speculating that rates won’t recover in the short term.“We don’t see a recovery for interest rates until 2013,” said HSBC’s Mr Moseley. He added that HSBC Bermuda has been developing structured products, looking to generate profit for customers that will, in turn, generate profit for the bank.While the banks have money to lend, it’s who to lend it to that the panellists agree is a significant issue. This issue ties back to Bermuda’s lack of a credit bureau, land registry (currently in the process of being created) and sufficient comparative real estate sales information.“Banks like data, whether they are making loans or analysing your loan portfolio, the more data you have, the better,” said Mr Kopp. “Bermuda doesn’t have a tremendous amount of data. We’ve talked about how we can help accelerate the process (of collecting data) because it can improve closings, be more efficient for our borrowers and give us more control over our mortgage deeds.”Mr Kephart added: “When I got here in October 2007, there was only really one data point that was ‘the house was worth more this year than last year’. But the environment is changed, the house isn’t worth more this year than last year.”“It’s not easy to change the way we all look at things that we’ve grown accustomed to being the norm. We have to define the new norm and learn how to make sure the people understand that it’s not a scary new norm. It’s just a new norm.”