Canadian Banks in the Caribbean Atrocious Behaviour

Submitted by Jeffrey Butler – Freeport, Bahamas

At the expense of we the Caribbean people, their clients, and small businesses throughout the region, CIBC, Canada’s fifth largest banking institution, is using deplorable tactics to reduce losses and/or build profits. With regional losses of some US$21.8 million for fiscal year 2013, and US$199 million for the six months ending April 30, 2014, in the Caribbean, one would presume that the bank would want to work closer with their long time good clients here. Instead, CIBC is kicking us when we are down by making unreasonable demands during this economical slow period. We intend to bring this atrocious behaviour to light, and we implore media to get involved.

In 2006, CIBC bought the 44 percent Barclays Bank share of their combined First Caribbean International Bank (FCIB) venture. The capital cost was US$988.7 million. Management must have thought this was an earnings accretive acquisition. Now, however, CIBC is apparently trying to get a return of capital, not simply a return on capital, from their recently impoverished clients in the seventeen countries they serve in the Caribbean.

With poor service that many of us believe to be abusive, and the ridiculous demands for insurance, appraisals and securities, the bank is making it virtually impossible for many business clients here to stay in business during tough times. CIBC inflates the interest rate based on what they perceive to be their risk factor.  In one documented instance, the CIBC/FCIB is holding a debenture over assets and a personal guarantee that is in excess of US$5.0 million, on a loan note balance of just US$875,000. Where is the risk involved? Moreover, North American and European clients throughout the Caribbean seem to get a much better interest rate than those of us, black or white, who have been born and raised here by families that have settled here for generations.

When the US housing market collapsed in 2007 to 1.5%, being at that time 1.0% over the Canadian Central Bank rate of 0.5%. Here in the Caribbean, however, nothing changed. CIBC continued to charge its best clients a usurious rate of between 7.5% and 13.0%. Why?

The Government of Canada has given all Canadian Banks operating in the Caribbean a basically tax-free status on income from this region, so their shareholders love the huge profits from their Caribbean operations over these past many years.

In recent years, however, simultaneous with the decline in tourism and direct foreign investments throughout the Caribbean, the CIBC, in particular, has tightened its reins. Now they are choking the life out of the very same loyal clients who built the businesses that helped make that bank successful and wealthy in throughout the Caribbean the first place.

My personal experience and observation after being a loyal customer for over 36 years is that CIBC does not see very far into the future. For the Caribbean, they have a zero-tolerance “Special Loans” mentality. In other words, we are permanently on notice. I know that customers such as myself, and thousands like me, given the opportunity, would readily move on to other financial institutions if those other foreign banks too would not pile on us when things got slow for a temporary business cycle. Some countries such as Jamaica, Barbados, Bahamas, Trinidad, Cayman and a few others do have locally owned as well as European-based banks, so we should not allow these abusive Canadian banks, particularly CIBC, to treat us like second-class citizens in our own country. We should be taking action.

In my view, shared by my associates in several countries I do business with in the region, the CIBC has literally cut off its nose here; but, despite its locally declining profits and market share, they recently opened a new multi-million dollar office in Barbados. People throughout the Caribbean are having difficulties making loan payments, yet their bank believes it prudent to open new branches. Why?

As a prominent businessperson in Freeport Bahamas on Grand Bahama Island from a well-known family who settled this country hundreds of years ago, I can assure you that Canadian banks, especially CIBC, have little to no understanding of our local markets, culture or business needs. For example, CIBC in my city cannot make a decision locally on any account for any reason. All applications, every request, and all services must first go to Nassau, then from Nassau to Barbados, and then in a great many instances from Barbados to Toronto, which is over 1,300 miles away. Did you know that Toronto is just 1,000 miles away? Did you know we have very good bankers here, just a mile or two from my business? Moreover, this paper shuffling bureaucracy works the same way back via Barbados to Freeport. How can a loan officer in Barbados or Toronto know anything about an on-going business operation in Freeport? It was never like this in the nineteen eighties and nineties when the Banks were making huge profits based on local decisions.

It seems to me that CIBC can continuously make new policies, and change banking agreements and whatever, without any consideration for the client. They can cancel an agreed overdraft, and without notice, they can take monies from the client’s account for insurance or appraisals or legal fees. What are we to do? One example is that for 35 years, CIBC immediately honored all cheques regardless if drawn on Royal Bank, Scotia, Montreal, or Commonwealth Bank accounts. Not now. At CIBC, if it is not their cheque being deposited in their bank, they hold it for five working days, although the cheque clears in two working days. Why? Is the reason not that the decision-maker is 1,300 miles away and has almost zero knowledge of us in Freeport? We are certainly not alone. This same problem exists throughout the Caribbean.

Governments in Commonwealth countries such as Jamaica, Barbados, Cayman and The Bahamas require a cheque guarantee issued by CIBC before accepting company cheques payable to their Government’s Public Treasury. CIBC prepares that guarantee document, signs it with the account owner, and then sends it to the Government as assurance of payment in a given amount by the business issuing the cheque. Nevertheless, apparently CIBC feels they do not have to honour their own document because they do return cheques to the Government while waiting five unnecessary days for our deposits to clear their bank.

How does a Canadian bank get away with so much thoughtlessness in the Caribbean? Have our Governments not legislated banking rules and regulations or do they simply allow these banking giants to rape and pillage as they see fit?

I personally know several well-established Bahamian companies with well over US$6.0 million dollars in solid assets like inventory, furniture, buildings, and land but with temporary cash flow problems. Due to the US recession, felt throughout the Caribbean but particularly in Bahamas, these companies have formally requested the bank to help them through four slow months in the summer, outside the busy tourist season, by taking interest only on loans and extending the principal. While this policy would definitely help boost their client’s cash flow, the bank would lose nothing. Actually, the bank would make more profit. However, CIBC managers in Nassau would not even consider this idea. A flat “No, not at this time” is their response. In fact, the bank then says to the client that if you have cash flow issues, we will have to increase your interest rate by 0.5%.  Thanks CIBC.

If these Canadian Banks, especially CIBC, are concerned about their growing loses throughout the Caribbean, they should take a good look at how they are abusing their long-term clients. Solutions for these clients would pay much better in the long run over the bank’s existing policy of tightening the screw and forcing many, normally sound, businesses to declare bankruptcy; wasting time and money in the courts.  Doing so, in fact builds hostility throughout the community. Bankers need to remember that while they are protecting their rich shareholders in Canada they are putting thousands of honest, hard-working family people out on the street here. They do not understand or appreciate that we do not have the same unemployment and other social support benefits in the Caribbean as people enjoy in Canada. In the Caribbean, during the bad times, people live hand to mouth.

Bankers in Canada need to understand that we businesspersons in the Caribbean had absolutely no hand in the collapse of the North American bank system and subsequent economic downturn. Those problems were caused directly by the very irresponsible banks that are keeping us dangling by threads. We here in the Caribbean also had no hand in the tragedy of 9/11, but, cash flow wise, we are suffering for it more than North Americans are. We are also victims of other elements far beyond our control or influence, such as devastating hurricanes.

We all realize that the current economic downturn is a part of an on-going cycle and that one day, soon we hope, the Caribbean will once again flourish.  However, if, as and when the business cycle recovers, Caribbean businesspersons and our customers will remember the Canadian banks, like CIBC, that chose to step on us and kick us during trying times instead of working with us towards a better future for all of us. We will remember.

I truly believe that every person from the Caribbean or a descendant of the Islands of the Caribbean has a moral obligation to protest. Our brothers and sisters throughout the Caribbean should protest the abuse by the major Canadian banks by closing their accounts in the Caribbean and in Canada and moving to a Caribbean-owned bank or any bank with a cooperative and helpful reputation. We have in Ontario alone, home of the Canadian banks, many thousands of Jamaicans, Bajans, Trinys, Bahamians and others that can and should make a difference by closing and moving their bank accounts as soon as possible. There are, we know, many good banks in Canada like TD Canada Trust and the National Bank of Canada that do not go to the Caribbean to steal from its people. The same applies to all our brothers and sisters throughout the Caribbean:  close your account and find a good locally-owned bank.

Send CIBC and the other major Canadian banks that operate here a message to be heard loud and clear in their management offices, their boardrooms and by their shareholders:  STOP ABUSING THE PEOPLES OF THE CARIBBEAN.

34 comments

  • I endorse and agree with this Article 100%.

    Like

  • Happy New year
    To All.

    Like

  • Reblogged this on Smiley Yearwood and commented:
    I’ve had problems with CIBC myself and I think one of the major problems is a clash in management culture between Caribbean and Canada.

    Like

  • pieceuhderockyeahright

    @ Jeffrey Butler

    While one can say that our governments, even though they are supposed to have legislated the rules by which these expatriate banks do business, you do have to admit that agents of our regulators are hamstrung by successive “governments” (euphemism for political party of the day)

    governments, in an effort to keep foreign financial entities domiciled in our mostly cash dependent economies turn a blind eye to these pernicious practices and financial regulators, guided, rather commanded, by “transient political representatives” are loathe to apply any rules lest the inadvertently offend the government of the day and, more pertinently cause said financial institutions to fire staff (dilute political votes) or worse, close down

    Now Mr Butler sir that brings me to National Development Banks and the plethora of micro enterprises development agencies which, notwithstanding their colorful mandates and functions, while being created to fill that lending space which those financial institutions have abdicated, are even more rapist and “pillager minded” than the CIBCs and FCIB s that you rightfully denounce.

    If CIBC charges us 15% for a loan our indigenous development/lending agencies charge us 21%!!!

    Foreign investors e.g. Banks ARE NOT national development agencies and they are not here in the region to develop our cvntries or economies.

    this is something that we, even though having glaring examples in King Leopold III of Belgium and the occupation of the Congo and “others of their ilk”, have failed to understand.

    This following point regarding the MITI of Japan grows thin through constant repetition but I will repeat it again.

    When the United States packaged aid to the conquered Japan it did not do so out of any benevolence it did so to dissuade Japan from pursuing war.

    The recipients of said development aid had a vision and used that aid from the conquerors to make it the 3rd largest economy in the world.

    We continue to eke out a living under these CIBCs and mini representations of the World Banks of this world which have a clear vision of what they want.

    You will be a voice crying in the wilderness for the first step in redress that you are seeking, solidarity in our collective reaction to the Viking rapists and pillagers will die, not for lack of coverage through social media etc, but because what you are speaking to DOES NOT HAVE ANY ROOTS in our collective psyches.

    We are poor little lambs who have lost our way, baa, baa, baa…

    Like

  • St George's Dragon

    I dislike the way CIBC operates as much as the next person but I am struggling to understand how a company that is losing money can be accused of raping the Caribbean.
    So they come here, employ people, rent or build offices etc., lend money (admittedly at extortionate interest rates) but still lose money?
    What would you like them to do:
    1. Close down their business? That will tend to leave the remaining players in more of a monopoly position, which can’t be good (ref Lime).
    2. Cut costs? This will (in theory) allow them to reduce their interest rates but will presumably mean they will cut jobs.
    3. Carry out their operations as a charitable venture? I don’t think that is going to happen.
    Let’s face it – the days of small, friendly banks that relate to individual business’ circumstances have gone.

    Liked by 1 person

  • The problem is FCIB´s management. Lack of risk-control in the past, vast hierarchy, too many bosses, no stringent decision-making, lack of honesty with customers, far too many questions, long delays, slow responses etc. pp. It takes them hours to perform a small international transaction which is executed in North America or Europe within 3 minutes on your private computer. We all know that.
    FCIB gave large sums of money to local government (emergency loan, you remember?) for very high interest rate. Interest is climbing with every downgrade. Why should they care about private customers, if they have one single big client?

    Like

  • CIBC took a 543 million Canadian dollar write down and loss on its Caribbean operations in 2014. That is abut $1 bllion Barbados.

    http://business.financialpost.com/2014/05/15/cibc-to-take-420-million-second-quarter-writedown-on-firstcaribbean/

    If the economic conditions continue to be challenging the banks will continue to become more conservative. RBC has sold parts of is Caribbean operations. Major credit rating agencies have downgraded the economic out look for Barbados. There will be a tightening of credit. Cash is King. The banks at this stage don’t really care how much you are worth, only in what free cash flow you have to service your debits. That will only change when the economic conditions change.

    Like

  • Why do Barbadians especially like to focus on the supply side of the equation? Don’t we have it in our grasp to define the demand side? Think this is the point PUDRYR is making in his earlier point.

    Like

  • Here is an example of First Caribbean stupidity.

    I went into First Caribbean at Wildey, St. Michael, Barbados with my Canada Pension Plan (CPP) check for $142.94 CDN. I had with me a current Barbados driver’s license, which includes a color photograph of me, my signature and my home address. The bank told me that they would have to hold the CPP check for 6 weeks until it clears. I have been a CIBC/First Caribbean customer for 46 years, since I was fifteen. When I was 35 I obtained 25 year mortgage from CIBC. I paid off the mortgage in full in 19 years and 7 months. I have lived at the same address for 25 years and worked at the same place for 27 years. A part of my pay check goes to my first Caribbean savings account.

    I went next door to Scotia Bank Wildey and they cashed the CPP check immediately.

    I’ve worked at the East Caribbean Currency Authority, the Central Bank of Barbados, and Canada Permanent Trust Company (now Canada Trust) for a total of 10 years, but perhaps someone who understands more about banking than I do can explain to me why First Caribbean feels it necessary to hold CPP checks for 6 weeks even though First Caribbean ought to know that

    1. CPP is well funded and is certainly in a position to honor a check for $142.94 CDN
    2. hat the customer is a long time CIBC/First Caribbean customer in good standing

    3. That he customer has available for the bank’s inspection current valid picture ID.

    Can someone explain First Caribbean’s magical “we must hold the check for 6 weeks” policy. Is this policy necessary or is First Caribbean earning interest offa de customer’s pension money even while the pensioner/customer is waiting on the money to pay the utility bills and to buy the groceries.

    Like

  • @St George’s Dragon January 1, 2015 at 9:12 AM” I am struggling to understand how a company that is losing money can be accused of raping the Caribbean.”

    Maybe First Caribbean is losing money because it works so hard at alienating its customers.

    LOL!!!!!

    Like

  • @ Anon

    Anyone seeing your post should move away from them ASAP.

    I did approximately more than 7 years ago as after been a customer of over 8 years was fedup with the service(s) I received and moved onto another local Bank for which I have had no regrets.

    Liked by 1 person

  • The Public Accounts of Canada are in the ublic domain, right here:
    http://www.tpsgc-pwgsc.gc.ca/recgen/cpc-pac/2014/index-eng.html

    First Caribbean has access to these data, and has bankers who can interpret the data, so I don’t understand their problem in wanting to hold Canadian government checks for 6 weeks before cashing them.

    Like

  • @Anthony

    Which local bank did you go to?

    Like

  • Butterfield now First Citizen

    Like

  • @Anthony

    Is First Citizens Bank a local bank?

    Like

  • No it is a Trinidad Bank like Republic Bank which took over BNB

    Like

  • For the record, we have no local banks in Barbados. What you probably mean is regionally owned banks.

    Like

  • Butterfied was a Bermudian owned Bank and First Citizen is Trinidadian owned but the Bank was originally a local bank in Mutual bank

    Like

  • @ Clone

    Thanks for the clarification.

    Like

  • It might interest some that the significant shareholding in Sagicor formerly Mutual Assurance Society is owned by Trinidad shareholders.

    http://www.sagicor.com/Pages/Investors%20and%20Shareholders/Shareholding-Analysis.aspx

    Like

  • Happy New Years to the BU Community and to keep exposing the dark secrets to the light.Keep doing what you doing thanks to guy who ever you are behind the blog.

    Like

  • http://www.theguardian.com/money/2015/jan/02/mortgage-price-war-starts-banks-cheap-ixed-rate-deal?CMP=EMCNEWEML6619I2

    Local banks are holding out for higher interest rates in an almost dead market. They are unwilling to do business at lower rates. They prefer to fleece their customers with their ridiculous fees. Can someone tell me why Barbados doesn’t have a Building and loan society?

    Like

  • @islandgal

    It is what we mean when PUDRYR and BU referred to the focus on the supply side of the equation. The private sector needs to see the opportunity and invest where there is opportunity. We seem to be happy with the Trinis and others from outside to invest only in retail to support conspicuous consumption.Then we have these ‘pawn shops’ who are now lending at 30%. We like it so.

    Like

  • On thing was suggested long ago on this blog and has not been taken up by Government.

    New measures to ensure that mortgage relief and arbitration for those finding difficulty paying mortgages needs to be legislated immediately.

    Just because a person loses a job is no reason to jump on their HOME. Thus, it is essential that any government OF the people and concerned ABOUT the citizens will implement mortgage relief and a court process to adjust mortgages to allow for payment and negotiated payment terms.

    Like

  • David we are very good at playing the VICTIM never the CONQUEROR ! Without US the banks have no business! Why can’t we get this in our heads????

    Like

  • @islandgal

    Your last comment bangs the nail squarely on the head.

    Like

  • What seems to be lacking in our small, passive and somewhat mendicant society is the love of self!

    I have had many an opportunity to observe the bahaviour of the CIBC-FCIB staff at the two Warrens location as I have made my way to that location to purchase lunch from a lunch van that frequents the banks premises.
    One is often in view of white, Canadian or other European employees rolling out very calmly, chatting among themselves for 15 to 20 minutes at a time, or having a smoke along the hedge next to the Williams properties, while local and black employees are running around like madmen and mice in full view of their colonial task masters who intently observe them scampering about from the comfort of their glass towers, timing their absences from their desks.
    I have a simple solution. Barbados belongs to ME. Not a Canadian, Not an Armenian, not an ex-pat. And on that Armenian talk, I want the US to swoop down and lock up that dude who is in charge of their Private Wealth Management group which is exclusively in the business of hiding the assets of the wealthy white Americans from the IRS! He has no right in Barbados. None!
    Secondly, why is the damn Immigration Department handing out so many work permits for their(FCIB and other companies here) high paying jobs? Cumulatively, there should be no more than 100 Work Permits handed to non-national for these types of jobs per year with a “non-renewal” clause attached.
    Barbados has way too many well trained and intelligent people who can do these same jobs, whose taxes are going to stay here, whose investments are here and who have some vested interest in Barbados. Even if that interest is selfish at best, it benefits Barbados.
    Finally, we, Barbadians, have an option when dealing with the white untermensch who come here and enjoy our sea and sun and spit in our collective faces.
    Outside of us instituting a “Sun tax” on their raw hides, I would implore us all to remove our mones from their institutions, and place it in the Credit Union, which is undoubtedly ours. And by the way, we want the CU’s hands unshackled so that they can offer Credit Cards and Checking accounts.
    Barbados belongs to us, as far as I am concerned, when I see this kind of trash, I act by making my money unavailable to those who would have nothing good for me or my land.

    Stop talking, stop taking shyt, and ACT!

    Like

  • The Central Bank of Barbados, money banks, so-called credit unions, finance houses and other relevant financial institutions that make up the core financial system of this country, and the respective employees of these particular institutions are – by way of many adverse and backward political legal financial policies and approaches that have been implemented by themselves or the relevant others – tremendously responsible for this very prolonged political economic depression in Barbados.

    Also, local so-called politicians and so-called economists and the various local institutional structures within which they operate in Barbados – are the other entities that are substantially responsible – by way of many despicable and unstudied political legal financial policies and perspectives that have been implemented by themselves or the relevant others – for this said protracted and deepening political economic depression in this country.

    PDC

    Like

  • @ The Watcher ”And by the way, we want the CU’s hands unshackled so that they can offer Credit Cards and Checking accounts.”

    Excellent and obvious, what are they waiting for???

    You know how much profits are in credit card and financing???????????? THAT is the marmalade jam for the banks!

    Like

  • pieceuhderockyeahright

    Sex Infidelity and Banking.

    As I said earlier banks particularly international banks domiciled in Bulbados and the West Indies are here to make money, the are not development agencies and portfolios that are not performing mean dilutes shareholdings for investors in the mother country so, whatever policies that the motherland sees as necessary to made the normally indolent, 24/7 easy going natives hustle, they do, aided and abetted by governments and regulators

    When you are in a relationship and you are not getting what you need it is the current practice to stray for that gratification and, with all respect to those who can and have remained true to the principle and promise of fidelity, banking relationships do not have any such moral, ethical or legal considerations, if you are not satisfied by the relationship, you leave.

    A few banks encash the social security cheque drawn on external sovereign entities immediately and/or if you have monies in you account to cover the cheque, you have to remember that, in this age where one can digitally print a false sovereign social Security cheque from your laptop, the bank will seek to safeguard against that.

    Now any bank that takes that six weeks to clear is telling you lies since, as long as the routing numbers, correspondent bank and SWIFT code are known, barring connectivity issues, and national holidays and non business days, the funds clear in 6 days tops. what that institution is doing is playing with your foreign currency on “overnight markets” for five weeks.

    We change girlfriends/boyfriends husbands/wives for less important reasons I.e. “She doan lay lay like Sandra does do” nor ” he parts too small” so what is the issue of finding a bank that gives you equity for your financial considerations?

    Like

  • The interest rate in Russia is 17.5%. Their economy is at zero or a negative growth rate. They have a free trading currency that has lost over 30% of its value in recent times. Who would want to invest money there at the moment?

    When one looks at the economic growth rate in Barbados, inflation rate, government deficits, and the fixed exchange monetary policy we are fortunate the interest rates charged by banks are as low as they are. If we want low interest rates we have to address inflation, GDP, government deficits and at some point the monetary policy.

    Like

  • Our ‘impartial’ broadcasters have become mouthpieces of the elite

    If you think the news is balanced, think again. Journalists who should challenge power are doing its dirty work

    http://www.theguardian.com/commentisfree/2015/jan/20/broadcasters-mouthpieces-of-elite-balanced-news-journalists

    Like

  • Watcher, “white untermensch?” Been reading Nietzsche, have we? Be careful what you wish for. If the white subhumans stop coming to your pathetic 166 sq.mi. of tropical misery, there won’t be any money left to deposit in your credit unions. It is the revenues from the tourism of these white subhumans that are keeping your sorry island afloat. And they have a choice. Keep up the racist rhetoric and you won’t have to worry about choice of financial institutions. There won’t be any.

    Barbados: dead island floating!

    Like

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