The head of the Financial Services Commission is insisting the industry is strong enough to withstand the fallout from Government’s plan to send home 3,000 workers.
Acting chief executive officer Warrick Ward said that’s despite a spike in non-performing loans, which would in turn affect capital and lead to reduced profits for some financial institutions.
The acting CEO said stress tests conducted by the Financial Sector Assessment Programme have proven the resilience of Barbados’ system.
“Whenever there is a downturn in the economy, people tend to draw down deposits which reduces the ability of banks to lend and people won’t be able to service loans,” Ward said at a Press conference today.
“We did a number of stress tests on the system to see under what circumstances we see a collapse on a macro-level or a fallout in the financial system and even when the Financial Sector Assessment Programme was here, they did some extreme models and it showed the the system was extremely resilient simply because the level of capital built into the system is very high and so there is enough capital to buffer this fallout from the economy.”
The acting head said the agency was also working with individual institutions to ensure there were “risk-mitigating systems” or a Plan B.
Meantime, officials at the FSC, which has oversight of the international business sector, were contending that the industry had what it took to pull Barbados out of its economic woes.
Director of Insurance and Pensions Randy Graham noted that with more 4,000 businesses operating here, the sector brought in more than $800 million in taxes alone last year.
He said the message must go out that the agency, formed in 2011, was an efficient and robust regulator.
“The international business sector does not need a massive amount of Foreign Direct Investment or a massive amount of capital injection to expand. We, at this time as a country, can move our tax revenue from $800 million to $900 million by adding another $100 from the international business sector with no injection at all of resources. We have all the skills set, we have all the things we need to expand the sector,” he said.
Earlier today, the FSC launched its public education programme, to be rolled out in stages, to inform residents of its roles and functions.
The agency’s revised corporate logo was presented today, and will be followed by more media appearances by officials.
Representatives also plan to hold face-to-face sessions with leaders of major corporate entities.