Canadian Banks Looking Elsewhere to Sustain Profits|Can the Credit Unions Do the Job?

The local credit union has 150,000+ members.

Two articles in the Canadian Globe and Mail newspaper caught the eye of those who are not fixated on navel gazing on the shitty affair ‘unfurling’ on the South Coast.  The obvious question is what does it mean? Clearly CIBC- and we include the other Canadian banks operating in Barbados- are concerned about the current and future state of regional economies and have taken decisions to mitigate risk driven by concerns by shareholders whose concern is always to create share value and to satisfy the forecast of the financial analysts.

Some suggest there are indigenous financial intuitions that can fill the void if the Canadian banks were to withdraw from the Caribbean, the credit union unions come quickly to mind. Some question if the credit union movement in Barbados is ready to operate at the level required to deliver a best in class service in a global market fraught with regulation. We are not questioning if the cooperative model can deliver financial services to participants, a look at the balance sheets of the leading credit unions in Barbados suggest there is work to be done to ensure key acid ratios are met.

The Canadian Globe and Mail articles highlight the level of debt which Barbados has accumulated  and the volatility of oil price that has negatively impacted Trinidad’s economy. These are two of the key markets in the English speaking Caribbean that have undergirded the stability of the regional economy in the post oil-crisis period of the 70s. The trivializing of credit rating downgrades and an inability by regional governments to address structural fault lines in our economies that are known by the policymakers must not instil confidence in the boardrooms in Toronto and elsewhere.

The reality is that replacing international institutions with indigenous ones will not address the underlying factors at the root of failing and poorly performing regional economies. The lack of interest by Canadian financial intuitions is symptomatic of a lack of leadership with the result, conspicuous consumption behaviour driven mainly by the globalization construct. Just look at Barbados to confirm the ease with which we- through our representative the government and private sector- have sold our best companies to non Bajan interest. What assets and symbols do we have left to define who we are as a people? How will our children define success in the context of nurturing Bajan esprit de corps?

The BU household has written voluminously for 10 years about the need to remove the weeds from the lawn. The weeds have sprouted to bush. ALL of the regional economies are now heavily indebted nations with decaying infrastructure and limited fiscal space to drive development. Our politicians who ‘lead’ in the model of government we practice continue to rollout policy directives that pander to feathering popularity and satisfying those behind the curtains with the money to finance political campaigns. The people can be characterized as ‘sheep’ in the process.

History is the teacher to portend how this will play out- Crash, Burn, Rise!

Here are the Canadian Globe and Mail articles.

  • CIBC aims to double share of profits from U.S. operations
  • CIBC mulls offering Caribbean subsidiary on U.S. stock markets Subscriber content

The footnote to this submission is that in Barbados we pride ourselves on being an educated people yet we have demonstrated a lack of ability to manage home grown institutions and to leverage the investment in education to separate Barbados from the rest. Why bother to invest in education if this is the result?

111 comments

  • @ Hal
    “By the way, has the small business unit ever set up or funded any small businesses? If so, how many since it was created?”

    I think there was some movement but in terms of actual activity , I really don’t know.

    BTW, Arthur argued and convinced his followers, that it was in our interest (more profitable) to sell the bank. You notice that Arthur is now talking about creating cities. I recall about two or three years ago, you mentioned , right here on BU,creating a large economic zone in the area of Weymouth, Roebuck Street etc.
    What Arthur and the apologists are refusing to say is that the corporate big boys already build their city in Warrens and will build more. They watched, Bridgetown and Speightstown deteriorate. They will keep pushing toward the north and create a new economic zone, while we argue about the IMF and play “experts”. Sooner or later we will have a country within a country and the game will go on and on……….
    It was Errol Barrow, who warned that one of these mornings we will wake up and find we have no country. He knew exactly what he was saying but……….

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  • @William,

    Poverty of ideas, like of material possessions, leads to people pilfering other people’s. I have often on this blog raised the issue of the waste of Weymouth, including the Transport Board site, one of the most valuable real estate sites on the island.
    It is a site that can be used to develop residential, leisure and commercial businesses, from apartments, shops, offices, a medical and dental centre, to a swimming pool and gym. And, with the use of the playing field (instead of the current wasteful use by the police), can turn that part of the city in to a top class location.
    In the meantime, the Transport Board could be moved to St John, the poorest parish in the country, bringing with it new jobs and businesses.

    I have also on a number of occasions suggested the development of at least two new towns – Six Roads (or Four Roads) and Boscobel, with government moving some public offices to such developments and incentivising the private sector to move to those new towns.. Such a move would also temper the chaotic rush-hour traffic heading in to town.
    On another occasion I have suggested the development of a Seawell New Town, with a three-star hotel, new shops, restaurants, bars, clubs, making the area around the airport a central entertainment destination.
    Poverty of thought is as much a crisis as the mentally lazy hysterical obsession with an economic orthodoxy, which leads the unthinking to talk nonsense about how developing Weymouth could lead to structural thinking, or talk about linear thinking, a concept they do not fully understand. Or some political party talking vaguely about a creative economy. I think first they should develop creative minds.

    It is also the outcome of a lack of dealing with ideas, preferring the cheap noise of party political abuse and cynicism. It is also the outcome of people not demanding more from their media, public intellectuals and politicians.
    @William, the government is using Bds$240m to put the Sam Lord’s Castle development back in use, it is also about to use a similar sum to put the so-called national stadium back in proper use.
    @William, that $500m could be used to do a hell of a lot more for the nation. In economic theory it is called choice theory, the rational use of limited resources.
    I have said before, Barbados is a failed state. Look around you for any number of examples of this: from Arthur’s sabotaging of the economy by selling off our state-owned financial institutions, to the abuse of the NIS fund, to our educational collapse, to the decay of public morals.
    What else do you expect from a society that cannot even remove excrement from the streets?

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  • @BU

    You continue to state COB has issues with the concept pf a Co-operative bank and we are divided , what are those concerns that you know about. The biggest concern COB has is the issue of credit unions cannibalizing the services which they provide but the commercial banks are already doing that with the same deposits from COB and and targeting their members . Christmas and back to school loans .

    The commercial banks are saying to credit union members bring your deposits from the credit union to access loans .

    The credit union movement is the natural progression to a Local bank , they jointly have the capital in fact the largest one has the capacity to go alone if necessary. The skills to run the institution is in barbados .

    The largest credit union started very small , people had no confidence in themselves and like we as a people don’t trust each other ,it is now a billion dollar institution after 46 years .

    The agreement is we will provide banking services through an independent entity at minimal cost to credit union members and Barbadians generally . There is no fundamental divide in the movement on the issue of the Bank it is the approach and the progression to that state of readiness to the Co-Op bank . Take some comfort from the model the credit union insurance company ( Co- operators General Insurance ) ., History will show that company started with the some credit union not being on board from the inception , now its fully owned by all members in the credit union movement . STAY TUNED

    Liked by 1 person

  • CREDITUNIONIST December 18, 2017 at 10:36 AM #

    The only legitimate argument against a credit union bank is that it will be managed by black Barbadians, which among the political class is the ultimate risk.

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  • @creditunionist

    Glad to hear there is movement, BU will stay ‘tuned’.

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  • @ CREDITUNIONIST

    Thanks for debunking the propaganda that there is widespread resistance to the credit unions having banks. It is amazing that some people who constantly attack the political class for propagating falsehoods, would engage in the same activity, and then proceed to denigrate those who call them out.

    Like

  • St. Vincent & the Grenadines has a Co-operative Bank located at the Corner of South River Road & Bay Street, Kingstown, which has been servicing Vincentians from around (circa) 1945.

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  • St. Vincent & the Grenadines has a Co-operative Bank
    ++++++++++++++++++++++++++++++++++++++++++++
    They may not have enjoyed the same blessing that Barbados has over the years, but they are not brass bowls.

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  • St. Vincent’s Co-operative Bank does not offer all the services as commercial banks…….however, similarly to the credit unions, interest on loans is calculated on the reducing balance.

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  • @ CREDITUNIONIST

    Too many of us arrive at conclusions based on misinformation. I know of one credit union that was built by those who were philosophically in tune with the basic concepts. Many evenings they hopped into one car and drove the length and breath of the island selling the concept and building membership. Today, that credit union has millions of dollars and its own corporate building. Those who are active participants in change think differently.

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  • @Artax

    It may not be widely known but many small banks and credit unions are being supported by “bailout support” in the OECS.

    Like

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