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Establishing a National Bank, Pie in the Sky or …

Mia needs to keep airy-fairy long term ideas like inter-island ferries and a new national bank in her head and the discussion rooms until they are fleshed out and sources of financing are identified. What she needs to do is call in ministers Prescod and Duguid and find out what short and medium term plans they have for garbage collection and transportation respectively – Bajan in NY

At 3 hrs:11 minutes of the video – Town Hall Meeting with Barbadians living in Brooklyn, New York #WeGatherin – Prime Minister Mia Mottley floated the feel good idea of reestablishing a national bank.

The BU family has discussed this matter extensively, credit unions have been trying for years to establish a credit union bank that of late has morphed to an alliance with Capita, a 100% owned company of the Barbados Public Workers credit union.

The blogmaster has a couple questions.

Section 21. of the Barbados Institutions Amended Act, 2018-51states:

Restrictions on business activities

41F.(1) Subject to this section, a license

(a) on a solo basis shall not incur exposures

(ii) incur an exposure to a person or group in an amount that exceeds 25 per cent of the capital base; or

There are other restrictions that should be of interest for inquiring minds.

How would the government of Barbados capitalize a national bank given its perilous financial state?

Successive Auditor General reports paint a picture of a poor financial governance culture. How would this prevailing culture influence the management of a national bank?

 

237 responses to “Establishing a National Bank, Pie in the Sky or …”

  1. John A Avatar
    John A

    @ Hal.

    Plus don’t forget they will give you a $10000 overdraft if you open a savings account with them and deposit $10000 on it. Lol

    Banks are no different to any other business they either innovate or perish. Remember when banks controlled car loans? Then companies like Globe and Consolidated came along and changed the game. All a new bank needs to be is Innovative and modern In their approach. I have a friend who lives here six months of the year and he is catching hell to open an account, even though he and his wife own property here. I thought we wanted hard currency ? Must have been rumour.

    If a new bank came along and said bring a land tax bill and 2 forms of ID to foreign property owners you don’t think they would get both their business and hard currency?

    Bunch of dam jokers.

  2. William Skinner Avatar
    William Skinner

    @ John A
    Your determination and consistency cannot be questioned. You must continue to press on . Calling some of them jokers is really a compliment. Obviously you are a mild mannered person.
    We want to change everything but deep down we want things to remain the same. It’s not what you know but who you know.
    Cold soup warmed over is now the special of the day. Ideas and innovation is not on the menu. We don’t have a social partnership we really have social partners. Two completely different things.
    Keep up the very good work John A.

    The Duopoly Rules

  3. David Avatar
    David

    @John A

    You should not let your enthusiasm get ahead of business logic. The blogmaster has posted several times that banks are failing and have to be bailed out across the Caribbean, you do not hear about it unless you follow that newsfeed.

    The suggest a business is sustainable based on the size of the population is the height of idiocy. The assumption being that players in the market will surrender the existing business. To make money a bank has to lend money and charge fees.

    What are we taking about here, building a bank from scratch or acquiring assets of existing. We are all over the place.

  4. de pedantic Dribbler Avatar
    de pedantic Dribbler

    @John A, your 12:15 is a bit confusing … so please explain further…for these reasons.

    Is Republic Bank a govt owned entity in the context of a BNB?

    When did Republic open that first bank and how many years have they evolved to be todays maguffy…so do u see that same growth trend line NOW in this contracting (merger) market regionally and/or our ‘gargatuum’ 250K people already shared-up market!

    The question is not whether Bajans can do the same as others…obviously we can… the question is how do we get back into a race and perform creditably when others are so far ahead already !

    Being patriotic is all good ….but sometimes one has to be practical and not sentimental…PARTICULARLY in business matters.

  5. John A Avatar
    John A

    @ David.

    Acquiring an active entity would be ideal but as I said Republic started here with one branch and COB no doubt started with their first customer as well.

    The point is we see every reason why something can’t work and the Trinis see every reason it can. By nature we are a negative and lazy people, hence why our commerce and prime real estate is owned by others. If we continue in this archaic way of thinking we will be reduced to no more than the employees of others in our own country.

    I for one don’t want to see that as our people’s future but the decision is theirs.

    Let me put one scenario to you. Let’s say Trinidad had a massive company producing solar panels for caricom who were banking with Republic in Port of Spain. Now let’s say a group of Bajans wanted to open a similar plant here in Barbados to serve caricom and they went to seek financing at republic here. How you think that ball would play out?

    These are things the politicians and others never stop to think about as their world is made up mainly of theory.

  6. Sargeant Avatar
    Sargeant

    Unless the Gov’t can cobble a joint arrangement with Credit Unions (and I can’t see them giving up their independence) it will be difficult for it to start a Bank. Unlike the BNB which had its genesis from the Gov’t Savings Bank with millions on deposit and a customer base of thousands a new Bank would have to scramble for customers. It couldn’t even use the name BNB as I’m sure the corporate rights to that name resides with Republic and start- up costs would deplete the Treasury.

    I’m inclined to give the PM’s musings about a “national” bank the same attention I gave Freundel’s statement about constitutional change to a Republic i.e. File under G for garbage.

  7. Hal Austin Avatar
    Hal Austin

    @ John A

    Plus don’t forget they will give you a $10000 overdraft if you open a savings account with them and deposit $10000 on it. Lol(Quote)

    You are talking about the business model, policy, not the creation of a new bank.

  8. John A Avatar
    John A

    @ Hal.

    So much would have to change you are correct. Thing is though it’s for us to decide what we want.

  9. Hal Austin Avatar
    Hal Austin

    @ Sargeant

    Have you ever seen a bank grown from scratch? I am out of this discussion. Some people are just speculating and talking nonsense..

  10. Hal Austin Avatar
    Hal Austin

    @ John A

    Why don’t banks in Barbados compete? And why don’t the regulators do anything about it? In the US, the home of modern capitalism, antitrust legislation is strictly enforced. In the EU they are doing the same against the big digital companies.
    A challenger bank in Barbados can compete where it matters: on paying reasonable interest rates on savings; by not charging for cheque books for current account; by not charging for people accessing their own money on ATM; etc. It is called customer service.
    As I have said, Barbados is seriously under-insured: income protection, mortgage payment protection, critical illness, dental insurance, legal insurance; mortgages (for example, every graduate of UWI is a potential mortgage borrower, but we have a poor housing market), life insurance (whole of life and term assurance), credit cards, direct debit. Barbados is a very under-developed financial market which the government is ignorant of – one of my criticisms of its leading economic adviser who knows better.
    And, as I have said, pay all public sector workers through the new bank. Some will move their money, others will leave it. Compete on the basics. Establishing a new balance sheet bank in Barbados is an open door. Look at banking Germany, community banks in the US and challenger banks in the UK.
    I am out.

  11. WURA-WAR-on-U Avatar
    WURA-WAR-on-U

    Small island corruption is always ugly because the victims are too vulnerable to fight back,,

    “Blitz Exclusive

    Prime Minister of Dominica, Roosevelt Skerrit faces a series of allegations of corruption, political fraud, money laundering, and involvements into numerous criminal activities, including drug trafficking. For years, he has successfully suffocated the voice of the independent media in that country and has also been continuing cruel persecution on his political opponents.

    But the team of investigative journalists of Blitz has already found several strong shreds of evidence of his corruption.

    On December 16, 2009, US Embassy in Barbados Bridgetown sent a confidential wire message to Washington, where it said, “1. (C) Allegations of corruption continue to mount against Dominica Prime Minister Roosevelt Skerrit as December 18 national elections approach. These allegations focus primarily on the Layou River Scandal, bogus Ambassadorial appointments, no bid government contracts, Ross University villas, and PM Skerrit’s personal real estate holdings. The opposition is attempting to package these ethical gaps into a viable campaign strategy, but so far the public appears torn between dismay at the scale of the transgressions and acceptance of a certain base level of corruption — as long as the corruption does not negatively affect them personally (and if they can benefit in some small way, so much the better).”

  12. William Skinner Avatar
    William Skinner

    @ Hal
    @ John A
    These apologists hate to think. All many of them do is wait until they political masters speak and then fall in line.

  13. Gabriel Avatar
    Gabriel

    Sargeant
    I thought you knew better….are you saying that Republic has no large deposits of government funds whether Central or Statutory on their books?

  14. Sargeant Avatar
    Sargeant

    @Gabriel

    Not sure what you are referring to, could you explain?

  15. Hal Austin Avatar
    Hal Austin

    @ William

    Many Bajans live in a little bubble. They google things and talk like experts; they get paper qualifications and think they have won trophies; they think the world begins and ends at Barbados.
    @ William, I have already mentioned Piers Linney, the incredibly successful businessman and lawyer (a former investor on Dragon’s Den, see him on You Tube), a Bajan by proxy (his mother is from St Philp and he spent his summer holidays in Barbados as a youngster). He is a technology expert and his office was (is) about 200 yards from the Barbados high commission in London. He has never been called in for a meeting with Barbados officials or even invited to a social..
    Some time ago there was a business meeting in Barbados and the key note speaker, an Irish guy I believe, dropped out and they needed someone urgently. I was asked to help and approached Piers and he dropped everything and came down. He loves Barbados and the two of us can talk about St Philip for ages..
    Why is he not one of our business advisers?
    I have said all that to say this: if Barbados is serious about establishing a Barbados-domiciled bank you can bet your bottom dollar they will only consult locals with limited experience. Rotating mediocrity. Has the troubled Transport Board ever called on any of the returnees who spent decades working on London Transport for ideas? Of course not.

  16. David Avatar
    David

    @John A

    Not sure what you mean. As far as memory goes Republic acquired BNB which had several branches in Barbados.

  17. David Avatar
    David

    @Sargeant

    Have to agree with you, hot air so far.

  18. Enuff Avatar
    Enuff

    Y’all keep talking about a bricks and mortar bank. Is that where the discussion should focus, or a challenger bank using already established brick & mortar institutions, i.e. post offices?

  19. Bajan in NY Avatar
    Bajan in NY

    @SargeantSeptember 27, 2019 8:48 AM

    I believe Mia and not Owen was leader of the opposition in 2009.

  20. Miller Avatar
    Miller

    David September 27, 2019 3:18 PM
    “Not sure what you mean. As far as memory goes Republic acquired BNB which had several branches in Barbados.”
    +++++++++++++++++++++++++++++++++++++++++++++++++++++

    How about completing the full banking circle and reinvent the wheel by inviting Barclays Bank to return to the region to do banking in cyberspace using a holographic form?

    Who else would fit the bill other than the adopted mother of the Trinidad National Bank and birth Mummy of the Republic Bank of T&T now grown up enough to have her own children right across the ‘smaller’ islands?

    With Brexit looming without a common-market type deal as part of the divorce settlement, Poor-Great Britain would have to look towards her now estranged former colonies to peddle her goods and services as in the good old glory days of Britain’s mercantilism and commercialization.

  21. WURA-War-on-U Avatar
    WURA-War-on-U

    Mia needs to tell the UN how many UN human rights treaties both governments have violated over the last 50 years in Barbados. She should tell the UN how many billions they have all STOLEN from the black majority in Barbados right along with the thieving lawyers and criminal minorities…that is what she should be telling the UN.

    It was not UN, US, Canada or even the wicked UK stole all those billions from the Black population. She needs to make sure everyone gets the story straight.

    https://m.facebook.com/story.php?story_fbid=1124665304409674&id=100005986451739&sfnsn=mo&d=n&vh=e

  22. David Avatar
    David

    Getting back to the topic.

    @Sargeant, your thoughts?

    https://barbadosunderground.files.wordpress.com/2019/09/gaston_browne_scotiabank-.mp3

  23. Vincent Codrington Avatar
    Vincent Codrington

    Round and round the mulberry bush we go. We do not know how to define it. We do not know what its function is.We expect it to work magic.
    Pie in the sky indeed. No one will be able to reach it in order to eat it.

  24. Sargeant Avatar
    Sargeant

    @David

    He is playing what they call in NA “hardball” and in the present circumstances he has scotia over a barrel but I wouldn’t discount them walking away but it maybe a pyrrhic victory for Gaston in the long run. He is also at odds with Republic seems they were asking for a premium over and above what they would have paid to Scotia for a minority position for Antigua (remember Republic also asked for an exorbitant price when Thompson raised the possibility of Barbados purchasing back BNB). He also raised the possibility of Antiguans not repaying loans if Scotia pulled unilaterally pulled out and I wonder if the bank is already dealing with what is called “noncurrent loans” meaning loans that are not being repaid.

    All in all, a fascinating and frank piece would have loved to hear more.

    BTW he also disclosed what is an open secret RBC is also leaving, FCIB probably isn’t far behind

    JUST MY TAKE

  25. TheOgazerts Avatar
    TheOgazerts

    https://barbadostoday.bb/2019/09/28/invest-with-bse/

    Very disappointed with the article. If you encourage people to move to the stock market with then you should mention the increased risk. If the officer did not mention it, then the journalist should have.

  26. Vincent Codrington Avatar
    Vincent Codrington

    @ David BU

    It would be interesting to know why these banks are leaving
    and why it is rumoured that they are leaving?

    Is there a secret agenda? Surely somebody is sending somebody a message?

    These adversarial approaches to doing the Nation’s business have to stop. Enough is enough.
    Or should that be “Enuff is Enuff”? Wuh Loss !!

  27. David Avatar
    David

    @Vincent

    It is a case enough is enough. These international companies are about growth and managing risk. The region does not fit the bill these days. You will see much more ‘downsizing’.

  28. TheOGazerts Avatar
    TheOGazerts

    https://barbadostoday.bb/2019/09/27/water-saving-taps-may-be-mandatory/

    Good idea. Should have been thought of and done a long time in the past….

    Make this your national motto..
    If it is yellow, let it mellow. If it is brown flush it down…

    I cannot take my own advice as my wife gets angry and call me names if I try to let it mellow

  29. TheOgazerts Avatar
    TheOgazerts

    https://barbadostoday.bb/2019/09/27/fair-ftc-decision-says-bwa/

    Forgive me for I did not follow the full story…
    ‘
    It appears that some literary genius had a moment of brilliance, did some creative writing, all agreed on the terms, but when the mess hit the fan, they decided to ignore the guarantees in the creative writing.

    Stop copying stuff from elsewhere and develop what i suitable for you

  30. Vincent Codrington Avatar
    Vincent Codrington

    @ Theogazerts at 9:24 AM

    That allebed release from BSE is what I meant by commemters not understanding finance. Savings deposits are not investments. They are precautionary deposits to be drawn down when needed. The interest compensate for the loss of value over time. Investment in shares on the stock exchange is speculative game and very high risks. Savers are not interested in stocks. Theyare outside their risk tolerance. It is misleading to entice them with half truth

  31. David Avatar
    David

    @Vincent

    You are saying the approach by the Central Bank under Worrell to entice savers to buy saving bonds was an incorrect approach?

  32. Vincent Codrington Avatar
    Vincent Codrington

    Auto correct working overtime. Reediting what was already edited. Exasperating.

  33. NorthernObserver Avatar
    NorthernObserver

    @Enuff
    you have seemingly missed the point….if we cannot effectively run our current public bodies, how can we expect to add to that and have it work? We will be able to locate and implement the technology, and challenger/new banks are all about technology, yet we cannot find 5 garbage trucks?

  34. Vincent Codrington Avatar
    Vincent Codrington

    @ David Bu

    I am sure that you already know my answer to that rhetorical question.

  35. Vincent Codrington Avatar
    Vincent Codrington

    Northern Observer.

    I concur. If we cannot manage old ,mechanical technology Is it not a bit risky to trust their management of digital technology?

    We know the instances where they have messed up the systems. I will not list. No names . No lock up.

  36. NorthernObserver Avatar
    NorthernObserver

    @VC
    “It would be interesting to know why these banks are leaving and why it is rumoured that they are leaving?”
    Yes, this is the unanswered question.
    Where and why is the true battleground?

  37. Sargeant Avatar
    Sargeant

    Tell “Enuff” that the people like bricks and mortar, good luck trying to wean Bajans into primarily online/direct banking which are a staple of Challenger banks.

  38. Sargeant Avatar
    Sargeant

    The chap at BSE must have the best/loneliest job in the world, think if he went on a 5 year sabbatical anyone would miss him?
    I hope he has other duties.

  39. NorthernObserver Avatar
    NorthernObserver

    @Blogmaster
    a troubling audio.
    The speaker is seemingly aware of the fiduciary duties of others and not his own. On one hand Caricom leaders wish to spout Caricom, and then when a deal is made with a Caricom member organization, Republic, it is not ‘local enough’ for them. The beef is with Republic, who wanted a premium for a 40% share of Scotia A&B. Is Scotiabank not to sell to the highest bidder? The speaker’s valuation, is clearly a slap in the face to his own people/corporations, suggesting the BNS loan portfolio ‘has no value’?? Further isn’t the GoA&B willing to pay(40% of 26M) +/- $10M for a 40% share?
    the best marketing tool for any jurisdiction competing against A&B for any investment.

  40. Sargeant Avatar
    Sargeant

    @David
    I wrote earlier “ I wouldn’t discount them walking away”

    Here is a quote from a G & M article of two days ago (it is behind a paywall so providing a link would be unhelpful unless you are a subscriber)

    +++++++
    A Scotiabank spokesperson declined to comment, and it is unclear how the bank plans to proceed in Guyana and Antigua. The transactions are not financially material to Scotiabank but, in aggregate, were expected to deliver a modest boost to the bank’s capital ratios.

    NOT FINANCIALLY MATERIAL

  41. Hal Austin Avatar
    Hal Austin

    @ Theo

    Wow! This is highly reckless and silly, taking money out of under-performing bank accounts and placing them on stock exchange equities. Where is the regulator? Where are the consumer protection people? Barbados is a real bandit country. Some time ago the BNB was offering people loans to buy shares. You just could not make it up.
    As you rightly point out, the article shows off the reporter’s ignorance. But that is par for the course. By the way, I believe this is the reporter I offered some help to and he rebuked me, saying he was a senior reporter and was busy.

  42. Hal Austin Avatar
    Hal Austin

    @ Sargeant

    He is also studying law.

  43. Vincent Codrington Avatar
    Vincent Codrington

    @ David BU

    This is a classic case study for a Management student: the interplay of politics ,economics and finance. Was not Gaston Browne a banker? He should know what is financially material.

  44. NorthernObserver Avatar
    NorthernObserver

    @Sarge
    you know as well as I do, they (Scotia) are not walking away from anything. A journalistic interpretation is not relevant. Many heads have already fallen within their international division, the current group are on full alert. The objective of all 3 banks is to exit with minimal disruption, if possible.

  45. NorthernObserver Avatar
    NorthernObserver

    @TheO
    the BSE is merely echoing previous statements by the PM
    https://barbadostoday.bb/2019/04/02/investment-drive/
    @Hal will like the unspecified changes to regulation

  46. Vincent Codrington Avatar
    Vincent Codrington

    We seem to have plenty echo chambers these days. Commenters need to do their own thinking.There is no penalty for being proven wrong. Flying a kite serves a useful purpose. it allows the kite flyer to get expert inputs into policy making.

  47. Vincent Codrington Avatar
    Vincent Codrington

    @ NorthernObserver at10:35 AM

    I always wonder why Canadian Banks are less impacted by international financial meltdowns. Is the ability to act quickly and clinically their strong points?

  48. Hal Austin Avatar
    Hal Austin

    @ Vincent

    No. They are not big enough players. Even so they got caught up in the 2008 SPV scandal.

  49. Enuff Avatar
    Enuff

    Northern
    So do what, sit back and twiddle thumbs? I say no!
    Sargeant
    But aren’t you a proponent of innovation and ‘out the box’ thinking? I am confused. In any event, post offices and other pay points would be the brick and mortar. But think about it, cheques are going to be obsolete just now with payments made by online transfer, bills via online payment etc. With the establishment of a credit rating system, loan applications will be an online activity with instant decisions and depositing of cash if approved. Brick and mortar?

  50. Hal Austin Avatar
    Hal Austin

    Most UK banks offer online, telephone and in-house banking. Cheques and cash are demands by the regulator. It is also part of Nationwide’s policy to keep a branch in every high street until accountholders say no, along with many of the challenger banks (the reasons they were created in the first place to fill the gaps the big banks left open).
    New technology expands the cake, not reduces it.

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