Barbadians’ deposits in credit unions will now receive guaranteed protection in the event that a credit union fails.
That is because the credit union movement has been given the green light to establish a deposit insurance fund similar to that created by commercial banks. The announcement was made by chairman of the Financial Services Commission (FSC), Sir Frank Alleyne, as he gave an update on the work that the commission was doing with the credit union movement.
He was speaking during the FSC’s inaugural anniversary lecture at the Grand Salle yesterday. The lecture came as the commission celebrated three years of service.
Sir Frank told a meeting of industry players that the local credit union movement, which consists of 35 active credit unions, now boasted a total asset of $1.68 billion.
“We valued the loan portfolio March 31, 2014 with $1.3 billion. The [Barbados] Public Workers Co-operative Credit Union Limited accounts for 51 per cent of the total assets of the movement . . . . The City Of Bridgetown Credit Union’s share of the total asset stands at 22 per cent,” said Sir Frank.
He said the commission issued several guidelines to enhance the regulation of credit unions, including codes for “safety and soundness” for small credit unions, directors and management.
Complaints procedure was also issued for supervisory committee, guidelines for liquidity management, credit risk management, operational risk management, market risk management and deposit into societies, among others.
“I also want to tell you that the commission reviewed and submitted proposals to Government through our subject minister the Minister of Finance [Chris Sinckler] for the introduction of deposit insurance from credit unions. I think you know that this exists for the banking system. But I was informed a couple minutes ago by our minister that this has been approved,” announced Sir Frank.
He did not elaborate.
The Barbados Deposit Insurance Corporation (BDIC), in 2007, provided $25 000 for each depositor in the event of a bank failure. For many years the Barbados Co-operative Credit Union League has been working to get the same for credit unions.
And over four years ago the league sought the help of the World Council of Credit Unions (WCCU) who carried out a study of the local credit union movement and made recommendations.