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Barbados Public Workers’ Co-Operative Credit Union Limited In Expansionist Mode

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Recent discussion on BU suggested some fireworks would have occurred at the  Barbados Public Workers’ Co-Operative Credit Union Limited  (BPWCCUL) Annual General Meeting (AGM).

Here are a few notes on what transpired at the 18 June 2011 AGM:

  1. Thirty five credit unions voted this week to move ahead to establish a Cooperative Bank. Capita, a 100% owned  BPWCCUL company, is expected to form the ‘backbone’ of the project. Additionally it was revealed that the BPWCCUL will lead an initiative to build out a shared network to serve the smaller credit unions.
  2. The usual suspects were elected to serve on the Board and other committees, Cedric Murrell, Glendon Belle, Randy Graham, Suzette Clarke and Paula Byer.
  3. Net Surplus in the amount of $2, 219, 378.00 was voted with $1.1 million of the amount to be rebated to members at a rate of 2% .
  4. Members voted to increase the loan limit to BDS90 million.
  5. The biggest bone of contention at the meeting occurred when members questioned the format of the financials. The financials reflect a consolidation position i.e. BPWCCUL and Capita. A motion was carried to breakout the credit union financials for future meetings to allow members to better scrutinize the credit union’s performance.

The meeting was otherwise uneventful with a minority voicing concern from the floor and in corridor whispers about the direction the credit union seems to be headed given its obvious expansionist strategy. Those fears would have been heightened by Treasurer Paul Maxwell during his presentation of the Treasurer’s Report.

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121 responses to “Barbados Public Workers’ Co-Operative Credit Union Limited In Expansionist Mode”

  1. In the bank Avatar
    In the bank

    This was a very good meeting. The members were kept well informed by the Directors. The Directors have a fantastic strategic vision for Capita, which will see it become a bank, which is owned by all of the credit unions. As I think it will play out, BPWCCUL will sell an interest in Capita to the other credit unions at a price that BPWCCUL will realize, we hope material, gains on the initial investment, which will ultimately be distributed to the members. We are about to move away from the simple savings and loans business to the sophisticated business of banking. We are going to be wealthy.

  2. smooth chocolate Avatar
    smooth chocolate

    are we? yipeee

  3. Alien Avatar
    Alien

    As the saying goes, I think the tail has started to wag the dog and the tail will likely get stronger over time. A question was asked about whether shares in Capita would be made available to the members and the Directors responded by indicating that the Board of Capita would decide. The Directors later indicated that the credit unions decided to form a bank and Capita would be used to facilitate that objective. So the members are no longer in control of their major asset – the beginning of the end.

  4. just only asking Avatar
    just only asking

    I realize that members are not understaning what is happening, so on monday i will do what i have to do.

  5. Alien Avatar
    Alien

    Just only asking, please postpone any drastic action for now. Secure a copy of the relevant act and let us start paying due attention to the organization. It is very likely that a major decision, such as contemplated by the Directors, needs to be brought to the members. I fear that the Directors may not be fully aware of their authority versus that of the members. The Directors even seemed to be in awe of the people that should be answering to them.

  6. smooth chocolate Avatar
    smooth chocolate

    alien, u are correct Terrol Inniss especially seemed perturbed by any and every questioned put to the Board. i realized manasseh king tried to put forward thought provoking questions but some members seemed not to understand what he was driving act. the Board surprised me in how they went ahead and choice ‘competent’ members to sit on the board of capita. i got the impression that they knew they had access to our money and what they chose to do with it was their business. this is going too far. i remain committed in my decision to withdraw membership. i am getting the uneasy feeling that they will do what they care to with our without our support but with our monies. an infinitesimal practice too, shows me that they think they are Gods to us, this that they have their lunch in a private suite while the members sit somewhere else. i was offended by this. no longer will i contribute to this derogatory and lackadaisical treatment. it’s my money

  7. Alien Avatar
    Alien

    Smooth chocolate, as I said to Just only asking, please defer any drastic action. Get a copy of the relevant act and get to know what authority the directors have and what authority the members have. For example, the directors of a company, under the Companies Act, need the approval of the shareholders to make fundamental changes. It is likely the same for credit unions, but I too need to secure a copy of the applicable legislation.

  8. David Avatar
    David

    It appears the strategic direction of the BPW board maybe out of sync with the general membership.

    It is not to say the board is wrong but there is the distinct impression the members are being led by the board, yes the tail wagging the dog.

  9. Bush Tea Avatar
    Bush Tea

    All that is happening is that a Cooperative have been hijacked and is being converted into a regular financial institution. The Bush man predicts that it will not survive the coming financial chaos.

    It was enlightening to listen to the various arguments on BU in the lead-up to the AGM. How can so few of us understand the co-operative idea in a country with such high penetration? …. I guess because most of us joined to benefit from the income tax benefits and to access loans – NOT to be part of a self help organization.

    A Credit Union is NOT a financial institution, it is a financial COOPERATIVE. This means that the members have the final say. Directors can do anything that they wish to – provided that they get the members to agree to their intended actions (and that the action is within the law)

    Some like Brutus seem to think that credit unions morph into banks when they become large enough – you would be shocked at the sizes of some international credit unions – and they are not banks.

    If financial strength was such a key factor in security we would not be seeing the present global crisis. Once this cooperative looses the collective member’s ownership and control, it will go the way of CLICO… and for years that was largely Caswell.

    There is no question that members should be required to vote on these Board initiatives…. and someone should pay if this was not done with Capita….

    Other Credit Unions will also face strong sanctions from their own members if they agree to this nonsense about putting members money into this Capita scam to bail out PWCCUL.

    This is no time to launch a co-op bank – in the middle of the worst financial crisis in a century – this should have been done along with the Insurance Company – but guess who opposed it then…..

  10. David Avatar
    David

    @Bush Tea

    We are on the same page.

    A look at the BPW credit union balance sheet shows the alarming position where loans to deposits should be creating a concern for members.

    It means the credit union will have to aggressively compete with banks to raise deposits. What will this result?

    The fact that the banks by the Treasurer’s own admission seem to be swimming in money and the BPW credit union balance sheet does not reflect such a condition is a sure sign they have gotten the business model wrong.

    Did we understand the Treasurer to be suggesting that the credit union needs to look at mobile banking as well?

    BPW credit union under the current leadership seems to be taking on high risk ventures and we know what they say about risk reward.

  11. Barbados Public Workers’ Co-Operative Credit Union Limited In Expansionist Mode | Barbados news

    […] Meeting (AGM). Here are a few notes on what transpired at the 18 June 2011 AGM: Thirty five … Continue reading → This entry was posted in Top stories and tagged agm, annual general meeting, barbados, co […]

  12. baje42 Avatar
    baje42

    I thought the BPW leadership were well prepared for the meeting. I have concerns as well, primarily in the amount of risk the credit union will be exposed to but does standing still count as a strategy ?

    Terrol Innis seemed firm and fair, and I thought Paul Maxwell was very good at communicating. I did contemplate asking a q regarding the regurgitating of people within the leadership team but its a condition of the credit union that continuity seems to be a staple item.

    personally i thought it was a very well put together agm. I will continue to monitor capita in particular as I do think there is a risk it affects negatively on the credit unions finances.

  13. David Avatar
    David

    Is it usual for an AGM to start and finish and the CEO not to make some input into the proceedings?

    It appears from a distance Paul Maxwell is the person influencing decisions in the board room.

    @baje42

    The concerns here has nothing to do with Innis being fair.

  14. Alien Avatar
    Alien

    Members not having, or allowing themselves to be prevented from having, a say in fundamental changes is a serious weakness. Another serious weakness is allowing one set of people to interchange between the board and the committees for multiple consecutive terms. The members need to ensure that they routinely add new representatives. This will prevent irregularities, if any, from being concealed. Maintaining one group of people, in charge of $840 million, for an extended period of time is foolhardy.

  15. baje42 Avatar
    baje42

    @ David

    I was responding to early comment on Inniss handling of the agm as chair. paul maxwell is the dominant personality in that leadership. i mean you can see and feel it. the question is whether he is capable and trustworthy and so far the financials says he is . one of the disapointments of the blog culture is that it leads people to believe that the real world coincides with all blog views. I have to admit i went to the meeting expecting issues to raise their head big time. and maybe i was probably wanting them to emerge too.

    there are what…50k plus members and a few ppl posting on here. we have to be responsible because when doom doesnt appear to come it makes it look like we want leadership to fail to prove a point about the sky falling in. I dont want them to fail. I think there is risk being adopted too. but i also think they can be succesful if the members hold them to their mission.

  16. Brutus Avatar
    Brutus

    @Bush Tea – why can’t we agree that a credit union is both a cooperative and a financial institution? If you know everything about cooperative principles it does not mean that you can successfully run a credit union. Similarly, if you know everything about financial institutions that does not mean you can successfully run a credit union. Can we agree on that?

    I am not sure about all of this talk about going to members for every decision. BPWCUL had 55,000 members at March 2010, and maybe about 700 of them went to last year’s AGM. You are hardly going to get all of the people attending a meeting to agree, especially on major desicions, so let’s say 400 of them had voted to buy Clico Mortgage. You now have a decision for 55,000 members made by 400 members. That is less than 1% of the membership. Is it fair to gauge what the members want based on the 2% that attend the AGM?

    I guess they could have mailed out a document to all members giving the full analysis of the proposed purchase and then have a special meeting to approve the transaction. You could even have allowed members to mail in their votes or drop them off at the credit union. Let’s say all the members voted and 60% of them voted in favour of the acquisition. 22,000 members would not be getting their way. I am not sure this resolves the issue you are raising.

    If you want to argue though that as a courtesy the Board could have asked the members for their blessing of the purchase and the planned future direction, then I would probably agree with you.

  17. David Avatar
    David

    What happened at the BPW AGM is endemic of Barbados society today.

    People are concerned but don’t know how to effectively articulate that concern.

    The BPW is making a quantum leap way from a core philosophy which has served it well and it is being rolled out as if it were a walk in the park.

    It is a foreboding thought but in the main blog sentiment on BU has been on the money regarding a number of issues.

    By the way did President Innis have to use the B word today?

  18. Brutus Avatar
    Brutus

    Here is a comparison showing how credit unions differ from other financial institutions:

    http://www.woccu.org/about/creditunion

  19. David Avatar
    David

    @Brutus

    Credit union membership is based on a common bond, a linkage shared by savers and borrowers who belong to a specific community, organization, religion or place of employment. Credit unions pool their members’ savings deposits and shares to finance their own loan portfolios rather than rely on outside capital. Members benefit from higher returns on savings, lower rates on loans and fewer fees on average.

    You are being product centric in outlook, the thrust of the argument from Bush Tea, Caswell et al is the veering from a relevant philosophy.

    For example, in the current environment does it not serve member needs more to pursue a buyers club option?

    Such a decision would align better at this time as far as satisfying member needs compared to buying a ‘suspicious’ company, no disrespect to KPMG who we believe did the due diligence.

  20. anthony Avatar
    anthony

    Maybe an affordable group health insurance plan? Or offering group insurance plans ( home/auto/fire/flood etc )for the whole body.

  21. Brutus Avatar
    Brutus

    David – right now the members want loans but as you pointed out the credit union’s loan portfolio is already larger then recommended.

  22. David Avatar
    David

    @Brutus

    How does acquiring a mortgage company which will compete with the credit union for deposits help the cause?

  23. David Avatar
    David

    Might anyone explain why Treasurer Paul Maxwell presented the 5 or 6 PEARL ratios that were favourable to BPW? Why not show all?

  24. A. Freeman Avatar
    A. Freeman

    Stay with deposits and loans and expand on that – no frills and thrills. Retail business is still the best banking business – predictable, stable profits. Talk to Sagicor’s CEO about moving away from bread and butter business – the Lloyds investment – hopefully, he will follow Guardian’s lead and sell it. If an entity has sufficient capital that it may risk a portion without any threat to its survival, risking a portion of it for a higher return is acceptable.

  25. Alien Avatar
    Alien

    Just only asking and Smooth chocolate, I apologize to each of you for my earlier comments, wherein I asked you to defer any drastic action that you were planning regarding your interest in the Credit Union. I do not wish to see any harm done to the Union, but I respect that each member will proceed in a manner that is based upon the member’s circumstances and in the member’s best interest.

    Baje42, standing still is actually a better strategy than expanding into losses. Talk to the CEO at Sagicor about Lloyds – hopefully, he will follow Guardian’s lead and sell it. We often fail to realize it, believing that doing nothing is a sign of failure, but doing nothing is better than doing something, if there is no viable alternative. The former management of CLICO would be more than happy if they were currently running a boring life insurance company, with boring investments. Sagicor may wish to forget about Lloyds – seeing that they plan to seek BA’s and CLICO’s boring life insurance business.

  26. just only asking Avatar
    just only asking

    @David

    Sorry to say these words, you have a lot of ignorant persons who attended the meeting just for voting and then disappear, i am now convinved that they are looking for a job for the umemployed Dean. St. Hill, i going for my money and buy Government Bonds, as simple as that.

    It is clear that the accounts were consolidated to hide certain information, but it evident that ther is a gravy train to be milked. I hknow that gove will not restore that income deductible element of 3000 so the union could will see a decline in deposit as was evident in the financail statements. there was no rebust deposits during the year, How can you expand into mortgage business to compete with you core business. How can you tell me that Capitav is governed by the company Act and directors are selected and the Central Bank agrred to that? How can yo have a marketing Department and your expense on marketing increased by almost 100%, are the people in marketing just paid a salary.

  27. Brutus Avatar
    Brutus

    @David and others – does Capita really compete with the credit for deposits? The credit union’s deposits come from come from members and as has been pointed out above this may be affected by the removal of the tax benefit for credit union savings. So the credit union will have a backlog of loan applications and possibly a large decline in new deposits to fund the loans. The credit union is going to have to fight very hard for deposits and the total deposit portfolio may decline, meaning that the loan portfolio must also decline.

    The mortgage company’s deposits will come from higher income individuals, and from companies and organizations. Perhaps even from other credit unions. I don’t think that the typical credit union member is going to a company like Capita, Globe Finance, Consolidated Finance or Signia to place deposits. Somebody correct me if I am wrong.

    David, note that I have already said that I agree that the Board could have gone to members, explain the strategy, and ask for the blessing of members.

  28. David Avatar
    David

    Let us continue to place other views in the public domain. This matter is far from done. Members will wake up when the balance sheet of the subsidiary companies begin to negatively impact BPW surplus.

  29. Alien Avatar
    Alien

    According to the Directors, there are 700 members with balances in excess of $100,000 – $70 million and many members just making it. They can provide an analysis of the balances to show number of members with balances in selected ranges $0 to $1,000 – $1,001 to $5,000 – $5,001 to $10,000 and so on and the value of the loans to members in each range. The Directors mentioned something about contacting the $100,000 club members.

  30. Alien Avatar
    Alien

    Brutus | June 19, 2011 at 8:04 AM |
    Brutus, is the plan to direct the members to Capita for loans out of those deposits, as the Union’s deposits decline?

  31. Brutus Avatar
    Brutus

    Alien – I don’t know what the plan is. I am just trying to add some balance to the discussion, and perhaps the directors have not done a good enough job of explaining the issues involved and the plans. Does the credit union have a strategic plan and was it explained to members and approved by them?

  32. Brutus Avatar
    Brutus

    Here is another consideration. There are a number of PEARLS ratios that speak to growth of the credit union (eg. number of members, deposits, loans, etc). A credit union with over 50,000 members in a population of under 300,000 is running out of growth potential – it can grow but the rate of growth may start to decline. I don’t know if the growth philosophy follows from credit union principles or from the need for stability of the financial institution, or from both. But I think that growth is a major challenge for the BPWCUL because deposits have to grow before anything else.

  33. Brutus Avatar
    Brutus

    Alien – those are some interesting statistics on large deposits at the credit union. I would guess that a lot of those people have most of their savings in the credit union and have built up those deposits over a lifetime.

    David – you have allowed Caswell to make you nervous about the financial position and performance of Capita, but he is just guessing and fishing. We should try and get Capita’s audited financial statements and analyze them.

  34. Alien Avatar
    Alien

    Brutus, if this is the plan, and Capita is to become a bank, the humans and animals are looking the same. The members will need to make some decisions to either sell Capita and revert now or, if the Union is destined to cease, direct the Directors to take action to have Capita’s ownership transferred directly to the members. If all business is directed to Capita and Capita becomes a bank, given how the Directors responded to queries regarding Capita, the members must be sure that when some larger bank makes an offer to acquire Capita Bank, the current Union members are the ones to benefit, not a few officers and directors with large closing bonuses for leading the members to the sale.

  35. Alien Avatar
    Alien

    David, do you have a copy of the legislation for credit unions

  36. Bush Tea Avatar
    Bush Tea

    @ Brutus
    @Bush Tea – why can’t we agree that a credit union is both a cooperative and a financial institution?
    *******************************************
    Because it is NOT. This is actually like chalk and cheese

    A financial institution is an organization which is established to utilize capital (to exploit the fact that people need some degree of capital to live successful lives), in order to generate profits for the owners of the invested capital…..usually without regard to the social impact on the exploited users.

    A Credit Union is a cooperative arrangement between a group of people (usually with some common bond) which is established to pool the common financial resources of the group, in order to to meet the individual financial needs of group members, so that its members are protected from the uncaring exploitation of financial institutions.

    They CANNOT be the same.

    When Credit Unions seek to invest in ‘big business’ and to garner high ROIs and huge retained earnings, it is a clear sign that the leaders and the members have lost their way as co-operators.

    As someone said above, PWCCUL should have been asking its members questions like:
    1 – In the current situation how can the credit union best be of help to you?
    2 – Are we providing the kind of financial services that you currently need most? and if not what are these?
    3 – What are we doing that is not what you really need at this time?
    etc
    A simple survey can do all this Brutus. The Board will then have clear directions from members of what it SHOULD be doing.

    How many people do you think would opt to use their money to buy CLICO assets?

  37. David Avatar
    David

    @Brutus

    Caswell raised the point about the BPW credit union giving members consolidated financials to discuss at the GM, this annoyed members yesterday thankfully and a motion was passed to breakout BPW financials for next AGM.

    What is happening here is that we are bringing a level of analysis which a controlled plus passive membership of the BPW membership has been unable to bring.

    Also, you seem to be missing the point that in a market where the banks are swimming in deposits BPW has not been only able to generate moderate deposit growth. This speaks to something which needs to be better analyzed.

    What the situation means is that BPW will have to pay premium for deposits (time deposits) in lieu of the cheaper savings. It will mess with its cost base which violently contravenes its credit union philosophy articulated by Bush Tea above.

  38. Bush Tea Avatar
    Bush Tea

    Think about it Brutus….
    If your Credit Union was actually seeking to find out WHAT YOU NEED, and then responding to meet those needs…..nothing less than full commitment from members would follow.
    …when all this is done completely transparently and openly, and caringly (by unpaid volunteers) then there is FULL TRUST, reinforcing that commitment.

    The co-operative is THE righteous business model…. Bush Tea FULLY expects that this will be the business model of the future -when BBE’s will ‘will be done on Earth, as it is in heaven’

  39. Alien Avatar
    Alien

    Although Capita secures deposits from higher net worth individuals to fund loans, the Union members provide the capital investment to operate Capita. So has capital been diverted from providing loans to members to providing loans to non-members in the hope of making higher profits?

  40. David Avatar
    David

    A credit union using ONE of the ‘Bourne philosophy’ is to promote thrift.

    If we look at their Loan:Deposit ratio members are obviously borrowing more than they are saving.

    The business model seems to be a little dysfunctional at the moment.

  41. David Avatar
    David

    @Alien

    Check this link out, it maybe dated though.

    @Brutus

    Check this link out for Capita:

    http://www.capitacaribbean.com/

  42. Brutus Avatar
    Brutus

    @Alien – at March 2010 the credit union had $39 million of members’ money in cash and cash equivalents. Where do you think that money is sitting and how much do you think the credit union is earning on it. There was also $54M in investments. Furthermore the credit union’s loan portfolio is too high right now compared to its deposits (based on PEARLS).

    @David – I can agree with your post at 9:17 am. Perhaps the credit union should look again at how much members can borrow against their deposits. The members who want to borrow won’t like this but the members who have large deposits at risk might like it.

  43. Brutus Avatar
    Brutus

    @Bush Tea – based on your definition of “financial institution” I can see why we will never agree.

  44. Brutus Avatar
    Brutus

    @Bush Tea – I don’t know what membership surveys the credit union has done. Do you?

  45. David Avatar
    David

    @Brutus

    To your post Submitted on 2011/06/19 at 8:24 AM

    If BPW intends to compete with banks then its strategy will blend well and your point about the need to grow is pertinent.

    One senses the business model for the BPW is a little wobbly at the moment.

    To your point about a strategy plan, that is a good point, maybe Caswell can assist.

    @Alien

    Paul Maxwell no doubt believes that if 700 members have 100 hundred thousand then they have more money elsewhere 1, and 2 the credit union needs to ensure they are happy to prevent them running away.

  46. Alien Avatar
    Alien

    Brutus, are you referring to deposits held with the Central Bank?

    Is the only reasonable next step to secure the support of 50 members to convene a special meeting to deal with one matter – All things relating to Capita? No need to rush – no other business to be done.

  47. David Avatar
    David

    Is it not customary for a public company, in this case Capita, to publish its audited balance sheet online if it owns a website?

    All in keeping with transparency?

  48. Alien Avatar
    Alien

    Alien | June 19, 2011 at 9:49 AM |
    Brutus, I see it now.

  49. Bush Tea Avatar
    Bush Tea

    @ Brutus
    @Bush Tea – I don’t know what membership surveys the credit union has done. Do you?
    ********************************
    …actually yes…..
    but that is not the main point of my post. The point is that the credit union NEEDS to be member driven in its strategic planning.
    The results of such a survey should be the DRIVING influence at any general meeting.

    WRT the bushman’s definitions (off the cuff so just personal expressed definitions) how do we differ wrt financial institutions?

    Do note that the fact that a bank may be CARING and helpful to the extent that this approach helps it to reach its FINANCIAL goals is not to be confused with the credit union’s FUNDAMENTAL mandate to be caring and helpful to its BOSSES – the members.

    There is a diametrically opposite philosophical divide here that the Bushman is sure that you do appreciate…LOL

  50. Brutus Avatar
    Brutus

    @Alien – I am guessing that is why the other credit unions are so interested and excited.

The blogmaster invites you to join the discussion.

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