est. 2007

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To Open a USD Account Under Threat

A member of the BU family messaged the blogmaster’s inbox to inform that Scotiabank and FCIB are placing hurdles for persons wanting to open USD Accounts. You will recall the government declared that effective August 2, 2019 Barbadians can open foreign currency accounts without restrictions. Relevant link: Barbadians Can Hold Foreign Currency Accounts Without Restriction…

A member of the BU family messaged the blogmaster’s inbox to inform that Scotiabank and FCIB are placing hurdles for persons wanting to open USD Accounts. You will recall the government declared that effective August 2, 2019 Barbadians can open foreign currency accounts without restrictions.

Relevant link:

Barbadians Can Hold Foreign Currency Accounts Without Restriction

The government is obviously trying to create an environment for Barbadians to bring hard currency into the island. Feedback indicates the two banks mentioned have decided to make it difficult to open a USD account. They are saying  unless you are earning USD or receiving USD dividends they will not open a USD ACCOUNT for a Bajan.

There is speculation banks do not want to increase the expense line by paying additional insurance on a growing USD deposit portfolio. It is unfathomable Barbados is struggling to earn USD and there are entities generating  distasteful profits in times of austerity inclined to put up hurdles to an initiative that would assist the country.

Is this payback for the haircut on bonds banks have had to suffer as part of the BERT program?

 

 

138 responses to “To Open a USD Account Under Threat”

  1. John A Avatar
    John A

    @ David.

    They will find any excuse not to open these accounts based solely on one purpose and that is protecting their profit. They want to continue to profit from the sale of fx and that’s the reality. Although the PMs proposal is a good one it will be fought by the banks.

    Ask yourself one question bases on the submission Hants made above. How come the same USD they don’t want to take here for all these so called reasons they will happily take if I walk into their head office bank in Canada? Actually not only will they take it but they will compete for it as the information Hants supplied shows.

    How come not a single Canadian Bank published in the press their rates of deposit or annual fees for a locally opened USD account, even though approval was given months ago?

    We need to start thinking for ourselves and leave the yardfowlism out the equation. The point is these guys have quietly decided to blank the government’s decision by simply placing walls in place.

    Having said that I also blame the regulators here for not meeting with these offenders and putting in place what is required. So everybody got to hold blame here! As usual in the meantime the state and it’s people pay the price.

  2. John A Avatar
    John A

    @ Fear Play

    That is the point why these USD accounts are so important for protection of issues like drug dealing etc.

    Let’s say it is legal AND simple for Barbadians to hold USD accounts. What then say if someone was caught with $100,000 USD in cash walking around say to the police. Officer don’t mind it’s 3 Am I going to the bank?

    The current requirements for the account prior to the banks quietly introducing this last one, already cover proof of income . Large amounts say have to be accounted for if it is a property sale claimed, by a copy of the legal transaction. So all these so called excuses are already covered under the current requirements. This back door addition about having to be working for A USD salary by the banks is clearly an attempt of avoidance.

    I will look for the requirements that the government outlined when the law was passed and forward so you can have a read. Basically every excuse and so called concern is covered under the guidelines outlined under the current law.

  3. John A Avatar
    John A

    @Fear Play

    I am going to send the requirements to open an account to David as I don’t know how to post an attachment straight to the blog.

  4. FearPlay Avatar
    FearPlay

    Thanks @ John A

  5. WURA-WAR-on-U Avatar
    WURA-WAR-on-U

    “As usual in the meantime the state and it’s people pay the price.”

    as i already OPINED…another form of bondage for the majority population…who should FIND other ways to store their money…SAFELY…away from thieves and the eyes of the COVETOUS…

  6. john2 Avatar
    john2

    Two bank not offering the foreign account then check with the others. If you find one that will accept your business then go there and forget about those two.

    As a “common” man I would be happy to put my excess FX from my travel in an account. My small deposits will build up and be protection for me incase government decide to devalue in the future.

    Start withdrawing your money from and closing your accounts at the two non-complying banks and see how fast they will reverse their decisions.

  7. David Avatar
    David

    @John2

    To open an account you have to declare where the deposits have come and will come from.

  8. john2. Avatar
    john2.

    Is that for all the banks in the island?

    I have my receipts .

  9. John A Avatar
    John A

    @ David.

    Can you publish the requirements I sent you that government laid down before the banks added this “have to be working for USD salary ” nonesence. I had emailed you it earlier that way persons could see what was requested originally from government.

  10. David Avatar
    David

    @John A

    Will retrieve it.

  11. John A Avatar
    John A

    @ David.

    Thanks

  12. JOHN2 Avatar
    JOHN2

    John A.

    So the hurdles from government and not just the two banks?

    then that’s another story.

  13. JOHN2 Avatar
    JOHN2

    MISSED READ @ JOHN A

    UNDERSTOOD NOW.

    WILL WAIT UNTIL DAVID PUBLISH

  14. John A Avatar
    John A

    @ John 2

    No the government has done its part, it’s the banks now that are trying to avoid opening the accounts as they don’t want to have to insure the funds or lose the profit on selling you their foreign currency.

    Government is not to blame here although their intervention is now needed.

  15. john2 Avatar
    john2

    If the others/ some of the other banks offering what WE and the government want then WE got to take the power out of those two banks hands. Time to start using WE power of the purse on some of these businesses.

  16. SirSimpleSimonPresidentForLife Avatar
    SirSimpleSimonPresidentForLife

    Big issues and little issues. It used to be thought that foreign remittances from family in the North to family in the South was just a little thing, no big deal. Until the big boys discovered that for some countries remittances may equal or exceed foreign direct investments by the big boys.

    So let us say that I raised little Johnnie and little Susie. I worked my hands to the bone, and my belly touched my back so that they could get a great education. So they are living in the great white north now and earning the big incomes. The old lady is here in Barbados struggling to survive on the little NIS. But little Johnnie and Little Susie are not ungrateful “kids,” they want the old lady to live a little better in her old age, so they both send $100 or $200 USD or CDN or pounds sterling or Euros each month to help out. But the old lady is the thrifty sort and she does not spend all.

    Are you big guys telling me that the old lady cannot muster the little balances each month in a USD account at Scotia Bank or at first Caribbean International Bank unless the old lady can prove that she has a USD salary? But the old lady don’t wuk nowhere, hasn’t worked anywhere for years. So wha’ to do?

    Didn’t the PM say it we money, we can spend it [or presumably NOT spend it how we like]. I want to save my extra in a USD account at Scotia Bank or First Caribbean. Wha’ to do now?

    I int no drug dealer, nor do gun runner. I does go to church every Sunday as the Lord send.

    Now multiply that one old lady (or old man for my friends whitehill and the miller) by 1,000, or 10,000, or 20,000 or 50,000 or 100,000.

  17. SirSimpleSimonPresidentForLife Avatar
    SirSimpleSimonPresidentForLife

    MONEY SENT HOME BY WORKERS NOW THE LARGEST SOURCE OF EXTERNAL FINANCING IN LOW AND MIDDLE INCOME COUNTRIES (EXCLUDING CHINA)

    The money workers send home to their families from abroad has become a critical part of many economies around the world. Based on the most recent data, remittances, as this money is called, will only grow in importance. Officially recorded remittances amounted to a record $529 billion in 2018, and are on track to reach $550 billion in 2019.

    This money is flowing at about the same levels as foreign direct investment (FDI), but if China is excluded, they are the largest source of foreign exchange earnings in low- and middle-income countries, according to Migration and Remittances Brief 31, published by the World Bank Group and KNOMAD, the Global Knowledge Partnership on Migration and Development. In other words, if China is excluded from the analysis, remittances have already overtaken FDI as the biggest source of external financing.

    Today, remittances equal or surpass 25% of GDP in five countries: Tonga, Kyrgyz Republic, Tajikistan, Haiti, and Nepal.

    More ere: https://blogs.worldbank.org/opendata/money-sent-home-workers-now-largest-source-external-financing-low-and-middle-income

  18. SirSimpleSimonPresidentForLife Avatar
    SirSimpleSimonPresidentForLife

    The old people understood that a sheep head once a day is worth more that a hog head once a year. I agree with John A, the banks are afraid of losing their sheep head once a day. Every day. 365 days a year.

    That sheep head everyday is to sweet and the big foreign banks are very reluctant to let go.

  19. John A Avatar
    John A

    @ sir simple

    You are now starting to see why these banks here fighting it. Plus Don’t forget they taking the $100 USD bill from the old lady at at $198 bajan but going sell it tomorrow to you or me for $202 bajan!

    The cashing of remittances is easy money for these vultures.

    Now Mia want to come and mash up dem spree!

  20. Miller Avatar
    Miller

    @ John2 September 5, 2019 3:19 PM
    “As a “common” man I would be happy to put my excess FX from my travel in an account. My small deposits will build up and be protection for me incase government decide to devalue in the future.”
    ++++++++++++++++++++++++++++++++++++++++++++++++++

    Sorry to disappoint you John A. But you will NOT be allowed to deposit any unused portion of your travel allowances if these foreign currency allowances were purchased in Barbados.

    We ought to appreciate also that commercial banks are no longer interested in ‘servicing’ nuisance accounts whether denominated in local or foreign currency.

    Petty amounts of remittances would not attract the interest of the commercial banks.

    The preferred way of making these ‘small’ amounts of remittances or earnings work for the economy is for the government to seriously revisit the proposal of a duty-free shopping zone where locals can make purchases but only with foreign money which the retailers can either sell to the Central Bank or deposited in their foreign currency accounts to pay for their imports.

  21. David Avatar
    David

    https://barbadosunderground.files.wordpress.com/2019/09/screenshot-2019-09-05-at-19.21.14.png

  22. David Avatar
    David

    Why it is so hard to get USD in Trinidad & Tobago – Q&A with Marla Dukharan

    ONE LINE ANSWER: because you have an insanely overvalued currency.

    DISCUSS THIS: The 1% are favored to get as much as they want at the favored 1% official rate; they import, markup, bank the profits – most of it abroad, demand more at the official overvalued rate, they control the politicians and direct the political puppets to maintain the overvalued rate even as precious forex reserves are frittered away. When will we ever earn enough forex reserves to meet normal demand and when will we ever go back to forex reserves above 9-months import cover if we continue to waste it now?
    The 1% have an immediate advantage on the rest of the people since they can get $US at the overvalued rate; they can sell this immediately for an instant 15 to 20% profit on the blackmarket or to desperate SMEs; they can bank it; they can import goods at this rate and drive out & kill off competitors who have to go to the blackmarket to source forex to import for their business. Do you know thousands of small & medium companies and mom-and-pop companies have shut down during the past 6 years? (recession started in mid-2014)
    Even more idiotic and corrupt is EXPORTERS are being give special allotment of forex at favored overvalued rates! If you export then why do you constantly need forex? You should be earning forex with your exports, you pay expenses in local $TT, so why do you need forex all the time? CON GAMES!

    The rest of you, the 99%, are forced to go to the blackmarket to get any forex and when you tried to shop abroad to get better goods at better prices the 1% ordered the political puppets to jam you with a 10% online tax!

    The $TT is overvalued to such an extent that billions in forex reserves are wasted on “defending” that rate. Defending against who? why defending? are forex reserves put to good usage by defending an insanely overvalued currency? Why is H&S Fund used to run the day to day business of the government instead of spending on sustainable economic development, renewable energy projects, improved agri & tourism, build transport hubs with etc?
    So, how will all this end? when all the forex or most of it is used and only 3-months import cover remain & debt payment is more than $US600million per year, what will you then do? Will you then go to the IMF? (“you” refers to the Govt at that time since the current crowd of politicians will be gone at that time); will you devalue at that time when most of your forex has been given away to the 1% and used to “defend” the $TT? What are we getting for spending billions of $US to defend an overvalued currency?

    When you ask defenders of the PNM Govt where is the endgame in this policy, what will happen that will end this policy, how will we get out of it, etc, they cannot tell you because they do not know or do not want to tell you it will END IN AN ECONOMIC AND SOCIAL ARMAGEDDON!

  23. David Avatar
    David

    Agree with you Miller, banks are pushing nuisance accounts out of the bank.

  24. SirSimpleSimonPresidentForLife Avatar
    SirSimpleSimonPresidentForLife

    Talking about nuisances: Once upon a time, a long long time ago I owed the then CIBC $0.10 BDS, that is ten Barbados cents on my credit card account. Those nuisances sent me three bills in three consecutive months demanding immediate payment. Exhausted with their silly demands i finally taped a ten cent piece (Barbados) to the bill and dropped it in their drop box.

    That got the harpies offa my back.

    So the customers are not the only nuisances.

    The banks are also big, big, big bigable nuisances.

    Stupssseee!!!

  25. SirSimpleSimonPresidentForLife Avatar
    SirSimpleSimonPresidentForLife

    Scotia Bank at Haggatt Hall help my Canada Pension Plan pension check for 6 weeks to “ensure that the check cleared.”

    Imagine a Canadian bank in Barbados holding a Canadian government check for 6 weeks to ensure that the Canadian government does not bounce a check on them.

    Stupssseee!!!

    The banks are big, big, big, bigable nuisances.

    I walked into a Scotia Bank in Toronto. I had no account at the bank. The bankers did not know me from Adam, they asked for government issued picture ID. I asked whether Barbados government or Canadian government. They said either would do. I showed my ID and walked out with my cash in minutes. Gave it to Little Susie to buy school supplies.

  26. Miller Avatar
    Miller

    @ David September 5, 2019 7:23 PM

    In the age of a fast pace Internet banking world why would “non-residents/foreign nationals” want to go through that rigmarole of bureaucratic bullshit if they already have ‘foreign’ accounts in other jurisdictions?

    How about making life easy for people prepared to bring money into the Bajan economy by allowing them to open both a local currency account and another foreign currency account with the same ‘local’ banking institution?

    You cannot send money (‘material’ amounts) from any account held with a reputable banker overseas unless that transfer goes through a series of serious checks for fraud and money laundering risks.

    It’s really embarrassing the Bajan financial management authorities cannot even collect the taxes owed by the internal conmen and cowboys but want to pretend to be implementing regulatory ‘controls’ (checks and balances) which are already in place in the most sophisticated manner.

    One step forward and two backwards it seems!

  27. David Avatar
    David

    @Miller

    The challenge for this government as it was for the last one is how will failed policies affect the recovery.

  28. John A Avatar
    John A

    This move was mainly aimed at Barbadians being able to hold USD accounts. The idea was to get the money out the mattresses and into the banking system. Instead of doing that though a system that does not function will force those with USD to bank them in Miami or New York, as they have been doing for the last 20 years.

    In the meantime we sit down and whine about being in a hole no one will help us out of.

  29. john2 Avatar
    john2

    Back to the old milo tot for me!

  30. David Avatar
    David

    @John A

    The reality is that if the banks want to frustrate the opening of USD accounts for whatever reason it will happen. The central bank has never shown the teeth to force the banks to do anything in Barbados. The blogmaster posted the view back when that Worrell and the central bank sold out to the banks by removing the minimum savings rate in return to create an attractive market for savings bonds. This collusion should be punished.

  31. David Avatar
    David

    @John A

    If what you say was the intent why the stipulations from government?

  32. John A Avatar
    John A

    @ David.

    The stipulations listed above would still have been needed and are not unreasonable at all.

    What they are doing is simply trying to ensure they look for illegal activity and sums that could not be substantiated by income levels.

    By knowing someone’s salary say was $48000 bds a year, if they came with $5000 USD to deposit this would not be questionable, as they could easily have purchased that over a period of time. If however an unemployed person with no income came to deposit $5000 USD one would have to wonder where those funds came from.

    That is why on large sums they asked for proof of source. If say you sold land and were paid in USD you would have proof of earnings from the legal transaction. The point is under the current requirements there was ample provision for proof of income already in place.

    What is amusing though is the same conditions the said banks have been using to open local accounts for years with no problem, have all of a now because it’s USD involved become a problem.

    We will see as you say if the MOF or Central Bank will step in to rectify this situation, or if it will be yet another case of hot air and lost opportunity.

  33. David Avatar
    David

    @John A

    The flaw in your position is that the banks will want to know the source of the USD.

    On Fri, Sep 6, 2019 at 12:38 AM Barbados Underground wrote:

    >

  34. John A Avatar
    John A

    @ David.

    The source of the USD is only a concern if the amount does not bear relation to the persons Barbadian income as I showed above. Government and the banks know bajans have been hoarding USD for years, it is therefore only an issue if someone showed up with an amount of USD way in excess of what their Barbadian income related to. They are already in place guidelines for USD deposits at every Canadian Bank in every province of Canada, no one here needs to therefore reinvent the wheel.

  35. NorthernObserver Avatar
    NorthernObserver

    Source of funds is subject to greater scrutiny every month. I may for example, have a salary of Bds$400,000, but how did I manage to convert Bds$200,000 to US$100,000? Where did that US100K come from? The source, not evidence you have earnings to justify the amount.
    @SS it is standard for banks to work closely with local governments. Did u try taking your NIS chq to deposit/cash it in Toronto?
    The fact the institution has the same name, does not mean systems between countries are connected.

  36. Sam, Shank Avatar
    Sam, Shank

    Miss M doing too much flying about, getting caught up in the usual politician free rides for her and her cronies.

  37. David Avatar
    David

    What if heavens forbid Barbados is devastated by a natural disaster, what will our expectation be from other countries?

  38. David Avatar
    David

    @Northern Observer

    The very point the blogmaster has been trying to make to John.

  39. WURA-War-on-U Avatar
    WURA-War-on-U

    “It’s really embarrassing the Bajan financial management authorities cannot even collect the taxes owed by the internal conmen and cowboys but want to pretend to be implementing regulatory ‘controls’ (checks and balances) which are already in place in the most sophisticated manner.”

    Oh ya noticed the IDIOCY….cannot collect a billion dollars in VAT STOLEN from the people and LOCK UP THE THIEVES..

    …cannot collect billions in taxes from tax evaders…including her family….

    …cannot lock up anyone for hundreds of millions missing from the treasury and pension fund.

    …..or lock up those who have been MERRILY SKIMMING from contracts and DRAWDOWNS…did someone say Sam Lord’s Castle project…a could swear ah heard Enuff…….but want everyone to believe…she “got this”.

  40. WURA-WAR-on-U Avatar
    WURA-WAR-on-U

    i heard Caswell is on the airwaves, wonder who he is giving some live hell..lol

  41. fortyacresandamule Avatar
    fortyacresandamule

    @David. Great discussion. My take is the effect of opening up of foreign account locally and its attendant consequence of dollarisation in the banking sector. Dollarisation refer the level of foreign currency deposit to local currency deposit. This have further consequences down the road on interest rate and the fixed exchange regime.

  42. fortyacresandamule Avatar
    fortyacresandamule

    @David. You can also have leakage, where people just convert Barbados dollar into US$ account. This leakage can put tremendous pressure on the exchange rate. To maintain a fixed exchange rate while at the same time operating a relative liberalised capital account, your interest rate policy cannot be independent. It will be greatly influenced by the US federal reserve.

  43. David Avatar
    David

    @fortyacres

    It is the blogmaster’s understanding forex held by banks is treated separately as compared to central bank reserves. Our informant advised banks are limited to hold some % of foreign liabilities. The challenge will be availability of foreign funds to satisfy demand if such occurs. Will the government flex existing requirements?

  44. fortyacresandamule Avatar
    fortyacresandamule

    @David . As discussed before, the issue of source of fund, especially cash deposit, cannot be overemphasized enough. Caribbean banks in the region have problem shipping out bulk US$ cash to the USA. This service is a important function of corresponding banking for banks in the region. Only Bank of America right now is willing to take on the risk. Other banks have discontinue the service.

  45. fortyacresandamule Avatar
    fortyacresandamule

    @David. Correct. The commercial bank foreign deposits are not considered part of the country’s foreign reserve, but only the central bank foreign assets.

  46. fortyacresandamule Avatar
    fortyacresandamule

    @David . Yes, banks have to keep a balance of matching asset and liabilities. Any level of mismatching can cause problem especially when it comes to dealing with different currencies.

  47. SirSimpleSimonPresidentForLife Avatar
    SirSimpleSimonPresidentForLife

    @NorthernObserverSeptember 6, 2019 12:53 AM “SS it is standard for banks to work closely with local governments. Did u try taking your NIS chq to deposit/cash it in Toronto?”

    No.

    NIS is direct deposit. No paper cheque.

    Except that I have been banking with Scotia for 20 years. My pay cheque used to go there. My pensions go there. They had for years cashed my CPP immediately. Then a six week hold with no explanation.

    I ought to be in their good books. I do not engage in financial naughtiness. I always pay my bills on time. Don’t bounce cheques.

    Still no explanation 7 months later.

    A reasonable explanation would be nice, even now.

  48. nineofnine Avatar
    nineofnine

    How did we get here?
    The pre-election admonition when foreign reserves were dwindling and at an all time low was to target the DIASPORA which holds bulk for-ex reserves in their financial instruments and banking institutions.

    It was also noted that INCENTIVES be given to those wishing to partake in the venture of holding a For-ex account in Barbados.

    Further, these accounts be held ONLY at the Central Bank with an established timeframe BEFORE any withdrawal.

    It was NOT intended to be part of the local banking system, though some For-ex can be generated there.

    Former Minister Sinclaire raised this idea in the HOA (maybe after reading it here in BU..hic) but never made mention of INCENTIVES which is KEY for Diaspora participation.

    So, how did we get here?

  49. fortyacresandamule Avatar
    fortyacresandamule

    Trinidad has been dealing with US$ currency shortage even before the collapse of oil price in 2014. T&T is very americanized in its taste and expectation. Therefore, they burned through a lot of green backs on consumer imports. Another fact, T&T has the largest car market in caricom, over two times the Jamaican car market. Almost Every middle class households in Trinidad own two cars.

    This burnt rate of foreign currency depletion is not sustainable for Trninidad. All because they want to prop up an over-valued currency at any cost. If that is the strategy, then in Trinidad’s scenario, they will need a reserve ratio of about 100% of GDP.

    Even Saudia Arabia is going through its own adjustment by offering to sell shares in its most valuable asset ARAMACO.

  50. John A Avatar
    John A

    Where our mistake came here with the introduction of the USD accounts was when the PM stated “I will leave the details to the banks to sort out.” Her hope was that these banks would of welcomed the introduction of these accounts, not realising that they would fight them tooth and nail so as not to lose the monopoly they now hold on the sale of Fx.

    We will now have to see if the authorities will step in and remove these banking hurdles or if they will cave to the Canadian bankers.

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