The published financial statement of Republic Bank (Barbados) Ltd is a reflection of the banking experience and a reaction to and of the indecision of the Barbados financial and social landscape; the indecision of Government’s handling of the economic “crisis”. This is not yet a crisis of the people, but it is going to be a crisis once critical decisions are made shortly.
We learn that Barbadians on the whole are not poor. Judging from the patronising of the supermarket on a daily basis, we could say that we do not have a problem. Also judging by the excess liquidity in the banking system. But we do. Barbadians are by nature savers. We learnt it from our parents. Republic Bank has reported in these seemingly difficult times that over a period of one year, it alone among many banks has increased its savings by $60 million. People are keeping a close watch on their money. Is there an underground market?
What has the bank done – and is it pervasive among the banks – invest the savings in Treasury Bills ($134 million increase), not in lucrative loans that only show an increase of $23 million, followed by a decrease in investment securities of $64 million? There is a reduction of profit of $8 million for the year.
‘Other fees’
It’s true that much is due to the insolvency of the government of Grenada. But did you notice that in spite of a decrease in interest earned, there is an increase in “other income” – fees? One would think that a decrease in interest would accompany a decrease in fees (even with provisions for bad debts). Not so. We are seeing the propensity among banks to make up for a decrease in interest from loans by an increase in fees.
For example, in Jamaica banks are finding all kind of scurrilous reasons to institute charges. Probably we may be copying what is happening there and in the United States. It is said that in Jamaica if a customer needs to go to a teller to cash a cheque on a current account, a fee is levied. Maybe we should see the same happening soon in Barbados.
I believe that our Central Bank does not want to intervene. Perhaps the banks claim that the increase in
fees is necessary for them to stay in business because the economic climate for dispensing loans is unfavourable – lack of confidence in businesses, reluctance to take chances and indeed laziness in marketing operations are some of the reasons. We do not have a national bank or a development bank to lead the way in supporting any entrepreneur who is willing to supply growth to the economy – or are there none?
A crisis there may be, but there certainly is no crisis in the volume of savings that exists in the country. There is a crisis in the manner the savings have been utilised. Can you blame the banks? Perhaps not! We chose to ignore advice, so we pay the penalty. Do the maths. From 2008 to now, 72 months. Multiply that by $50 million per month borrowing and printing money. That makes BDS$3.6 billion less giveaways for re-election, money not accounted for, gallivanting on foreign jaunts, unaccountable losses and other things, Government would have no deficit. It would have saved at least $2 billion and would not be facing the present embarrassing circumstances.
Again I say, there is need for a national financial institution. This time around we must allow it to be run by bankers, not the politicians or their henchmen. The “piow piow” efforts at lending that the Government has set up in the last few years have had no impact. We boast about how learned and educated we are, yet there is limited output in entrepreneurial enterprise. What is the benefit of spending these scarce resources if we do not provide an outlet?
We seem to choose the poorest of the lot to lead us. The situation is upside down. So we vote for who can bark the loudest. Maybe we deserve to be in this position when a hundred dollar bill can influence our voting. The 3, 4, 5 000 laid off certainly have one’s sympathy, for that decision even the most cold-blooded must have been difficult to make.
But Wild Coot, why are you blaming the people who take the Grantleys? It is the donor and their big-up shadows that expect to get the contracts that should be blamed. It is not only the decision to lay off workers that we should worry about, it is the decision to pay compensation and national insurance from a depleted National Insurance kitty.
• Harry Russell is a banker. E
