Sunday, April 21, 2024

Straughn: Make a move


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Economist Ryan Straughn has urged players in the credit union movement to go ahead with plans for a credit union-owned commercial bank, suggesting that a number of mergers and acquisitions could be coming to the local banking sector over the coming years.
Straughn made the comments during the annual general meeting of the Barbados Teachers Cooperative Credit Union at the Hilton Barbados recently where he addressed the topic Why Our Credit Unions Should Start/Own A Bank, Benefits Of Such.
“This is a very important question, especially for financial institutions such as yours and indeed the rest of the industry as you currently rely on some of the services of commercial banks,” said Straughn.
He noted that over the past two decades, “the banking segment of our economy” witnessed several changes, including the introduction of a number of new players, new products and practices, and greater IT integration for enhancing customer service.
The Barbados Economic Society (BES) president noted that in addition to ownership, corporate governance practices and disclosure patterns have also changed.
“So we now have five commercial banks operating in the space of which three are Canadian-owned and two Trinidadian-owned,” he said.
“There appears to be more mergers and acquisitions activity in the banking sector as a few weeks ago First Citizens announced there will be an initial public offering sometime later this year. Clearly, the foreign banks have all flexed their muscles and are prepared to do so again to protect and/or expand their turf,” said Straughn.
“Indigenous banks have been swallowed up in the tsunami of mergers and acquisitions activity in the Caribbean. Though the environment remains supercharged with more mergers and acquisitions activity being anticipated, there is still considerable room for a highly motivated and focused insurgent. The answer to the question posed by your president to me is certainly a resounding yes,” he added, noting that there was the alternative of forming a “mega credit union”.
Straughn, who is the managing director and chief executive officer of ABELIAN Consulting Services, cautioned, however, that the decision to establish a commercial bank should be in the interest of the collective membership of the credit union movement “as it relates to the business case”.
He said, too, that all credit unions “must” get on board “in order to flex your collective muscle to make the difference in the market” and should not assume nor take for granted that current membership would offer patronage to the commercial bank simply because it was owned by cooperatives.
He further proposed that through a cooperative bank customers could be offered “a one-stop solution” in the form of banking and other financial products, including insurance.
“Any consideration for the establishment of cooperative-owned commercial bank must, in my most humble opinion, include expansion across its entire Caribbean where cooperatives exist. Failure to do such would be to repeat the same myopic behaviour of some of our famous local conglomerates, who turned out to be sitting ducks waiting to be picked off,” said Straughn. (MM)


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