Falling Interest Rates in ‘Lockstep’ with the Economy

The Central Bank of Barbados announces a further tightening of its monetary policy stance. The policy change will be applied to the Barbados Dollar securities reserve requirement ratio for commercial banks licensed under Part II of the Financial Institutions Act and it will be implemented in two phases.

Effective December 1, 2017, commercial banks will be required to hold 18% of their domestic deposits in stipulated securities. From January 1, 2018, commercial banks will be required to hold 20% of their domestic deposits in stipulated securities.

This is the second increase for the year and complements the fiscal initiatives introduced by the Minister of Finance in his Financial Statement and Budgetary Proposals earlier in the year.

The cash reserve requirement for commercial banks remains unchanged at 5%. The reserve requirements for deposit-taking trust and finance companies, and merchant banks also remain unchanged.

Central Bank news release 2017-10-31

The news that commercial banks have significantly reduced interest rates on deposits has not come as a surprise to the BU household. Banks are reportedly paying any where from .01% to .25% on deposits. Clearly if banks are about creating shareholder value- like any good public commercial enterprise states as an objective- why do Barbadians expect the banks to pay interest on deposits if there is no avenue to lend excess funds?

When the central bank conspired with commercial banks to remove the minimum interest rate in April 2015 as a strategy to create demand for 5.5% yielding government savings bonds and reduce the cost of servicing domestic debt, the decision confirmed to BU, Wild Coot  and a few others that the economy was in free fall read deep dodo. It appears Barbadians are not as bullish in buying savings bonds and credit unions, insurance companies and other non banking institutions have benefited from deposit placements.

One of the downsides to a protracted low interest rate climate is the impact  on institutional investors. This is important in the Barbados context because of the limited options available to invest AND the role commercial banks play in the domestic market to satisfy the risk appetite of fund managers. It is no secret that the Barbados investment climate lacks sophistication and can be characterized as a closed market. Although credit unions are promoted as a viable option in the local market, the current legislative framework does not position the movement as a significant player, this is reflected in its asset penetration compared to the banking sector.

Earlier this year when the central bank increase the % of deposits commercial banks are statutorily required to hold to 20%, again Wild Coot, BU and a few others wondered about the response from the banks. Minister Chris Sinckler is on record confirming that the commercial banks have significantly reduced  takeup of government securities ostensibly because of sovereign risk exposure linked to 20+ credit rating downgrades. By ‘forcing’ banks to hold more funds on reserve there was bound to be a price to pay for the extra-risk being carried by the banks. A reminder of Newton’s third law – for every action, there is an equal and opposite reaction.

Where do we go from here?

The market is in a hold position until the next general election is called. No significant decision will be taken by the market to inject significant investment whether local or foreign. Investment from Maloney/Bjerkham is the one exception given the fact they have replaced Leroy Parris and CLICO has the key campaign financier of the incumbent DLP government.

The possibility exist for banks to further signal discomfort to the market by introducing a negative interest policy.

109 comments

  • We need our leaders/regulators to address the issues dispassionately and leave the PR and fluff statements at the door.

    Like

  • Well Well & Cut N' Paste At Your Service

    They cant address any issues dispassionately, because they dont address the real issues negatively impacting their own people at all, they just ignore everything in the hopes that it will go away…and they can continue in their fraudulent, pretentious, fantasy wirld created for them.

    Ah waiting for any of them to come out with any lies about they did not receive information any about Harris, CGI and the destruction of injured claimants/ people lives, destruction of the supreme court which by extension would have warned them all clearly about the destruction of the transport board through unnecessary liabilities….ah waiting on them…

    How the hell did Black people in positions to do the right thing by their own people get so callous and uncaring once they are given useless shit titles and small amounts of power over their own people…it’s disgraceful and they should all pay the ultimate price.

    Frank Alleyne, Chief Justice Gibson and the Commissioner of Police have been sitting on that Kutappa-Harris information for at least 3 years and doing absolutely nothing with or about it….and they got the nerve to believe no one was watching them…because their Black asses all sat in the same Satanic Demonic Masonic Lodge as DPP Leacock and David Simmons.

    But now it’s all coming apart at the seams, let’s see how they handle it, it’s fight or flight.

    Like

  • The FSC sees it fit to respond to the confidential report that was ‘leaked’.

    Interesting response.

    Like

  • David
    Frank has not a clue
    SG’s response is predictable
    They themselves have not a clue what they dealing with

    Like

  • @Pacha

    You are questioning SIR Frank’s bona fides?

    Isn’t Sagicor a BEST rated company?

    Like

  • @ David December 21, 2017 at 10:24 AM

    Pacha is sitting on justifiably solid ground in questioning the black knight’s “bona fides” when seen in the light of his past role as the current administration’s chief economic advisor.

    An administration which has ‘overseen’ 20 plus credit rating downgrades in less than 8 years with increasing haemorrhaging of the forex reserves, the lifeblood of all economic activities in import-dependent Barbados.

    Where was this czar of financial propriety when the fired guv of the CB allowed a forensically-established fraud to park his ill-gotten gains in the vault and turned it into a laundry contrary to the Act under which it operates?

    Any business selling financial services which has to meet, overtime, a large slice of its overheads from the insurance premium receipts and pension contributions rather than from investment income is heading in the same direction as CLICO.

    A word to the wise is enough!

    BTW, speaking of chief economic advisor, has a ‘suitable’ replacement been found since OSA’s ‘solicited’ application was unceremoniously disregarded by the primate of deceit, lies and propaganda?

    One is left to wonder what would have been OSA’s recommendations vis-à-vis the sale of the BNTCL and the Hilton hotel.

    Maybe Stinkliar has decided to rely on the ‘Physical Deficit’ jester Jepter and the garrulous clown Kellman to fill such a role.

    Like

  • Well Well & Cut N' Paste At Your Service

    “Where was this czar of financial propriety when the fired guv of the CB allowed a forensically-established fraud to park his ill-gotten gains in the vault and turned it into a laundry contrary to the Act under which it operates?”

    And that is just another reason why nothing Alleyne says can be trusted, they never stand up and protest or let their voices be heard when they should, when crimes are being committed against their people, these useless, titled idiots, but want to be filled with indignation when they are exposed.

    This is one time all of them will be held accountsble fir sucking taxpayer’s money every month and refusing to do their jobs.

    They had 2 days to lie and claim they dont know or dont have information about Harris and CGI….at least they have the decency not to lie….I give them props for that.

    Alleyne’s job is to explain to Bajans why CGI Insurance is still collectimg money from people in Barbados and not paying out any….why has that company’s license not being pullled for fraud and running a ponzi scheme on the island,..

    ….that is what Frank Alleyne and FSC should be doing, investigate that company as is their job that insurance regulators neglected to do for nearly 2 decades…explain to the island…why they are still allowing a fraud insurance company to operate in Barbados…check the company’s finances, something is not right.

    Like

  • Well Well & Cut N' Paste At Your Service

    And just in case Alleyne needs a starting point for investigating the Bailey’s and Peter Harris., this information is on CGI Insurance website…

    “CGI Insures over $4 Billion in property assets and occupies the #3 slot amongst local companies and is the second largest auto insurer with premium income of over $55 million annually. Annual claim payments are approximately $25 million.”

    That lie about annual claim payments at approximately 25 million is an outright lie…..money is paid to attorneys to keep cases ongoing in the supreme court indefinitely instead, what is the Chief Justice, the Judges and Frank Alleyne at FSC doing about this clear case of fraud by this company,

    Like

  • Yes David
    We are questioning frank alleyne
    , dodrigde Miller and all the other 11plus school boys.

    There is nothing wrong with not knowing but to pretend one does and mislead a country is worthy of death.

    The truth is that anything frank alleyne or dodridge miller think they know could only make SG and the FSC more feckless.

    Karma is a bitch. SG stole the company from the people of Barbados and the laws of nature will guarantee failure.

    It so happens that Alleyne and his cousin were part and parcel of that crime.

    Like

  • Well Well & Cut N' Paste At Your Service

    After reading Sagicor’s explanation, more the reason for Alleyne to do his job and also monitor and investigate very thoroughly, CGI Insurance who never publish their quarterly financials on their website as required by law…

    …who refuse to lodge their financials at Corporate Affairs for years at a time, despite it being a legal requirement…

    …who has never had to worry about oversight or monitoring by the same FSC led by Alleyne…

    Let’s see if FSC will finally do its due diligence…as people have been asking.

    Like

  • The FSC has an informative website. Some domestic companies have their 2016 financial listed.

    http://www.fsc.gov.bb/index.php/insurances/published-financials-domestic/192-2016

    Here is a link to the management team and Board that includes our own Jeff Cumberbatch.

    http://www.fsc.gov.bb/index.php/about-us-article

    Like

  • Was trying to figure out who was BUs millionaire, but there appears to be a gap

    Like

  • Well Well & Cut N' Paste At Your Service

    CGI is well known for not lodging their annual or bi-annual reports with Corporate Affairs, they sure as hell will not cooperate with FSC or list quarterly financial reports with them either….not going to happen…

    FSC needs teeth and muscle, they are weak as IMF saw for themselves.

    Like

  • Well Well

    The FSC has more teeth than it needs, but they are very short on brains.

    Sent from my iPad

    Like

  • @David
    Here is a link to the management team and Board that includes our own Jeff Cumberbatch.
    ++++++++++++
    Is Jeff on board with that characterization “our own”

    Like

  • Well Well & Cut N' Paste At Your Service

    Lol…Casweĺl, very cold..lol..

    That makes it worse that they have the means and laws to rein in the crimes and corruption of these companies committed on vulnerable people AND the supreme court…and refuse to do so, tiny brains or not.

    I had cause to call FSC to get information on the same CGI Insurance some years ago, not only do they seem to know nothing about this company that has an extremely bad reputation, but the dude with some title or the other that they patched me through, sounded as though I had woken him ip.

    That is why I am glad Harris is taking a whip to their asses, they like being slaves, pimps and sell outs to minorities, well let them drop their pants and assume the position.

    Like

  • Well Well & Cut N' Paste At Your Service

    https://www.barbadostoday.bb/2017/12/22/imf-wish/

    The more one reads….the more frightening it gets, this is a serious indictment and accusation of FSC and Frank Alleyne…

    The below 2 paragraphs are particularly disturbing….and one wonders why experienced actuaries like Walter Blackman are not utilized, Barbados HAS local actuaries, why are there no actuaries at FSC and particularly horrifying is, the FSC is being accused of not even checking, let alone investigating, half the insurance companies on the island, no wonder they commit crimes at all levels, abuse and victimize injured people at will, destroy the Supreme Court and just do as they like.

    How ironic, poetic, fitting and absolutely Karmic that it’s the head abusive demon Harris from CGI Insurance exposing all of this, obviously to get Alleyne fired from FSC, knowing the piece of shit, am sure he has someone in mind who is totally corrupt and easily manipulated to take Alleyne’ place at FSC to continue the inertia for his and CGI’s own benefit.

    “However, it expressed concern that since the establishment of the FSC back in 2011, only half of the insurance companies and insurance brokers on the island had been inspected.

    The report also revealed that the FSC has no actuary because the chief actuary position had never been filled, and that “no reinsurance expertise” was currently available within the regulatory institution.”

    “As a short-term measure to bolster capacity with regard to assessing Sagicor risks on a consolidated basis, FSC should utilize its powers under the FSC Act to retain one or more expert advisors on contract, such as a qualified actuary and a reinsurance specialist,” it added.

    The explosive document which has been met with stern rejection from the Sir Frank Alleyne-led FSC also took issue with the length of time the financial regulator currently takes to complete investigations. Examination reports “take an inordinate amount of time to be completed, and it is not unusual that a year can pass between the commencement of the inspection process for a particular supervised institution, and the finalization of the report for submission to FSC’s senior management and the operational division involved,” the IMF said.

    It further warned that the FSC was suffering from “implementation paralysis”, while pointing out that little progress had been made in implementing the recommendations made back in December 2016 from a CARTAC workshop on consolidated supervision.”

    “Washington-based financial institution suggests internal overhaul of the Sir Frank-led FSC

    Added by Marlon Madden on December 22, 2017.
    Saved under Business, Local News
    1Save
    If the International Monetary Fund (IMF) gets its way, significant changes would be made to how the domestic insurance sector is regulated.

    In a recent report, the IMF called for the “deficiency in expertise” and funding at the Financial Services Commission (FSC) to be addressed with a view to strengthening its oversight of the multi-billion dollar insurance sector.

    The draft report, which followed an October 9-13 mission here by members of the IMF’s monetary and capital market department, said that as a result of limited resources, the FSC was currently struggling to discharge of its mandate with respect to the insurance sector supervision, pointing out that there were only 56 staff members to fulfill a range of responsibilities, including “licensing, supervising and regulating the operation of financial institutions and promoting stability, public awareness and public confidence in the operations of financial institutions.

    “The FSC’s off-site insurance supervisory team consists of seven officers who are responsible for licensing and supervising 20 domestic insurance companies, approximately 50 insurance company branch operations, more than 200 companies registered in the offshore sector, as well as all of the country’s insurance intermediaries and loss adjusters,” the IMF added, while pointing out that “on-site supervision is carried out through a separate division consisting of six specialists for over 100 registered entities”.

    However, it expressed concern that since the establishment of the FSC back in 2011, only half of the insurance companies and insurance brokers on the island had been inspected.

    The report also revealed that the FSC has no actuary because the chief actuary position had never been filled, and that “no reinsurance expertise” was currently available within the regulatory institution.

    In terms of the FSC’s funding, the IMF report made no mention of the $1.3 million provided in the 2017/2018 Estimates, but said the bulk of financial resources used to support its operations were derived from corporate registration fees “which are very minimal”.

    With this in mind, the Washington-based financial institution took issue with Government’s current fee structure for multi-billion dollar institutions, such as Sagicor.”

    Like

  • Well Well & Cut N' Paste At Your Service

    Take note that CGI Insurance never uses actuaries either nor do they have reinsurance, as they should, but there is no one to investigate them for that, since the insurance regulator at FSC, dont have an actuary or reinsurance expert on staff either, as is mandatory in any real regulatory body.

    As Caswell opined, if Jeff is part of FSC…he should step away, unless he plans to head the agency himself..this will turn very ugly and I mean very ugly…not many people understand how very ugly this can turn.

    Like

  • Well Well & Cut N' Paste At Your Service

    “Caswell Franklyn December 22, 2017 at 8:36 AM #
    Well Well

    The FSC has more teeth than it needs, but they are very short on brains.”

    Ah can’t wait for the real fall out and blowback…this has been very long in coming, but it’s here.

    Like

  • It takes a SPECIAL breed of brass bowl to, in the face of CLICO, CAHILL and other major financial scandals, continue with such lacklustre, mediocre, third-rate supervision of major financial institutions as we are seeing here.

    When a body such as the IMF comes out and make such bold accusations, one can REST ASSURED that there are serious matters of concern to be addressed.
    The IMF tends to be ultra conservative when presenting such reports.

    The FSC is another one of Owen’s scams, designed to make it APPEAR that we were’ first world’ – when in fact, he was just doing shiite with his usual bull-shitting, ‘politics of inclusion’ optical illusion.

    Other examples beside FSC are:
    – Public Sector Reform
    – CSME
    – The Productivity Council
    – NISE
    – The Sewerage system
    – Selling out the BNB

    This ‘bullshit baffles brains’ approach works when the sea is calm….
    When the storm comes, however, it will be shiite flying (and flowing) everywhere…

    Like

  • “Bush tea

    Agree with you, when CL Financial / CLICO failed in 2007/8 all agree it was as a result of a catastrophic regulatory failure yet we have not seen any aggressive compliance framework implemented. This is something that cannot be done in stealth

    Like

  • when CL Financial / CLICO failed in 2007/8 all agree it was as a result of a catastrophic regulatory failure….(quote)

    We are all agreed, apart from the resident fraudster and mental case, that it was not theft or fraud, but regulatory incompetence that led to the downfall of Clico.
    It is also appalling ignorance that has the issue hanging around nearly ten years after the event..
    A competent supervisor would be on the case for every appointment, the balance sheet, every new product, that they did not shows they were not on top of the job.
    Competent regulators would have resolved the mess within weeks.

    Like

  • Well Well & Cut N' Paste At Your Service

    Bushman….not only is the shit now spinning out of control , leaking and splattering EVERYWHERE…but EVERYONE gotta be careful they dont get SHIT SPLATTERED ALL OVER THEM…..and ah mean EVERYONE….lol

    Ya have no idea how deep this shit is boiling from or how high the projectory will go…it is so amazing, everyone who knows personally about the situation is in awe…..but keeping their heads very low so no shit flies on them.

    Like

  • @WW&C
    the one you love, like he and a bunch have a racehorse. maybe you could bet on Boxing Day and recoup a few of the blenzers he short-changed you or one of your friends. In typical fashion, it is called ‘suck me off’, translated to, Lollipop.

    Like

  • millertheanunnaki

    @ Hal Austin December 23, 2017 at 8:38 AM #
    “We are all agreed, apart from the resident fraudster and mental case, that it was not theft or fraud, but regulatory incompetence that led to the downfall of Clico.”

    What kind of non sequitur is that?

    So how come other insurance companies like Sagicor did not go under like CLICO?

    Are you suggesting that similar regulatory incompetence did not extend to other insurance companies?

    Why did CLICO enjoy such a ‘deliberate’ oversight by the regulators?

    If it was not “theft or fraud” where did the millions of policyholders’ premiums end up if not in a jet-set lifestyle of the Duprey ass lickers?

    But we forget you are the chief apologist for the leper Greenverbs who still has a few millions of laundered loot ‘stored’ at the Central Bank for safe-keeping and earning an interest rate he will never earn at FCIB.

    The man is in breach of three pieces of legislation that ought to be the enforcement tools of the local regulatory agencies of financial services.

    And we are left to wonder why they are no being used.
    Seeing that you are about 4,500 miles away from the Bajan Banana Republic maybe you can tell us, right the know-it-all Hal the Great?

    Like

  • Miller
    You are so right.I too want to know if it was failure of regulatory oversight that caused this entire Regional failure from Guyana to the Bahamas.It was wholesale thiefing in Trinidad,Guyana and in Barbados for sure.The JA 4200 miles away must again be reminded the Barbados supervisor moved to the courts to have the lepered thief arrested and both she and the Chief of Police were sent on leave with the knowledge and OK of the PM of Barbados.It will be poetic justice that next year the new minister of justice will have some important people arrested and hauled before the justices.Some of the most brilliant minds in Barbados reside in one outstanding political party.This party will return Barbados to its rightful place in the Region and the Commonwealth of Nations come 2018.Blimmuh!

    Like

  • Well Well & Cut N' Paste At Your Service

    Northern…dont blink I told you, 5 years ago, the same CGI criminal would never had exposed the FSC, not even 1 year ago….but look how in the blink of an eye, times have changed..

    Ha, Ha…was just being his idiot self Miller..he woke up with me on his mind yesterday not realizing I would be ready for him, he thinks this is some game, just like thiefing Leroy Leper and David Thompson fraudulently misrepresenting themselves to clico policyholders, it never occurred to him that there was wholesale theft at clico with government ministers from the PM on down protecting such thefts, dont mind how many times he read it and despite Owen Arthur confessing there was political interference…Ha, Ha is dumb like that

    ….Hal misrepresented his position st the Financial Times and dont realize that companies these days keep their email information on their back up servers for many years after, just for those times when there is any fraud, copy right or other complaints against their current or former employees….and his letter only served to bolster my case of fraud against him, when the company investigates my claims and check their email servers…..that is how dumb Hal Austin is…

    Like

  • millertheanunnaki

    @ Gabriel December 23, 2017 at 7:55 PM
    “The JA 4200 miles away must again be reminded the Barbados supervisor moved to the courts to have the lepered thief arrested and both she and the Chief of Police were sent on leave with the knowledge and OK of the PM of Barbados.”

    What that well-harnessed jackass of a Bajan Limey ‘hold up in a cold north London flat ought to be expressing is his investigative concerns over why was a competent regulator in the form of Mrs. Braithwaite removed from her substantive posts.

    We wish the UK-based ‘know-it-all’ jackass would just stop trying to put himself in the local insurance regulatory seat and just keep to what he is good at; just hauling a load of Greenverbs apologetic bullshit, day in day out, from BU pillar to BU post.

    The UK-based jackass knows only too well that those perpetrators of the CLICO Ponzi scheme along with their ‘politician’ friends and defenders, had they been in the UK, would be spending Xmas behind bars all like now exchanging greetings across the pond with Madoff and Stanford.

    Like

  • Miller

    I know that your reference to the removal of Vernese Brathwaite from her post but I will answer anyway. She was removed because doing her job to the best of her ability might result in one of the people, who finance the DLP, going to jail, plus she was not a DEM. Mind you, the Opposition did not speak out on her behalf because she was not a Bee. The NUPW did not speak out because she was not a DEM.

    Sent from my iPad

    Like

  • Well Well & Cut N' Paste At Your Service

    And all that nasty political gamemanship with the thiefing insurance executives is what have ALL of that scum in both governments now exposed by the same thieves they were protecting,…

    I did not make that up…everyone knows I did not, given the events of the IMF/barbadostoday exposure…it can only go downhill from here.

    Miller…about two weeks ago I told dummy Hal to let the crap he talks on BU about the emails go, I knew what was coming down and actually told him that the emails he sent me and I posted to BU served their purpose, which he should have understood to mean that what we were doing, actually had some benefits…

    …instead of the idiot stay cool and watch it all unravel…since he already screwed up his chance at the best investigative story of his career, being the typical dummy and his own worst ememy, he is trying to upstage and make himself a nuisance.

    I did not make that up either, everyone on BU read his stupid letter from Lloyds which works to my benefit…steupppssss.

    Like

  • Well Well & Cut N' Paste At Your Service

    And all that nasty political gamemanship with the thiefing insurance executives is what have ALL of that scum in both governments now exposed by the same thieves they were protecting,…

    I repeat….because both Harris and Leroy Leper have been extremely close business partners with shared investments for the past 5 years or more…and they both will now be looking to protect their investments and fck the ministers and politicians who took their bribes..because they have become more or less useless to them…, except for Jerome Walcott who should not be making up part of any government because of his conflict of interest shares in Bayview Hospital and Diagnostic Services owned by Harris et al.

    Like

  • You actually make it appear so easy with your presentation however I to find this topic to be actually one thing which I think I would by no means understand. It kind of feels too complicated and very wide for me. I am taking a look forward on your subsequent put up, I will attempt to get the dangle of it!

    Like

  • You really make it seem so easy along with your presentation however I in finding this matter to be really something which I think I’d by no means understand. It kind of feels too complex and very wide for me. I’m looking ahead in your next post, I will attempt to get the grasp of it!

    Like

  • You actually make it seem really easy along with your presentation but I find this topic to be actually something which I feel I would never understand. It kind of feels too complicated and very large for me. I’m having a look forward for your subsequent publish, I will try to get the hold of it!

    Like

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