Don’t expect the board of directors of the Barbados Workers’ Union Co-operative Credit Union Limited (BWUCCUL) to support the establishment of a co-operative bank at this time. And the BWUCCUL said it does not stand alone in its objection to the establishment of a “Credit Union Bank” in the proposed format.
“The Board of Directors of the BWUCCUL is firm in its belief that the league’s resources should be spent on developing the Shared Services Business Model and acquiring some of the rights and privileges of the banking sector,” it said in a statement issued in response to a report published in another section of the media last week.
The BWUCCUL, which is the third largest credit union on the island, said it maintained that position in light of the total membership of all credit unions on the island, which currently stands at about 160,654, almost half the Barbados population.
“The bank may come into being in a highly competitive and aggressive banking sector, which currently has five well-funded commercial banks supported by parent companies resident in developed regions, primarily Canada, and which benefit from established systems and software shared across their entire network of branches across the globe. The list of high return products and services to be offered by the Co-operative Bank will actively compete against the Credit Unions’ products and services thus potentially reducing the market share of the Credit Union bodies.”
President of the BWUCCUL Dalton Medford said the services being requested by members – based on a survey – included ATM, online and mobile banking, and investment and collection services.
“The two to three larger credit unions that can afford those services are the ones growing and expanding whilst the others are slowly becoming irrelevant and beginning to suffer from zero growth. This is contrary to the principles and philosophy of the movement and more in keeping with the monopolistic structure the country is trying to move away from,” he said.
Medford explained that regional players had already “tested and tried” the business model for the Shared Services Company and, as such, the idea can be replicated in the Barbados Market. Meanwhile, general manager of the BWUCCUL Corinne Clarke said a survey conducted by the league’s consultant indicated that roughly 70 per cent of credit union members were willing to switch some of their business to a co-operative bank.
“My rough calculations project that if 70 per cent of the membership move 50 per cent of their business that will adversely impact the performance of the Credit Unions in Barbados, especially the smaller ones,” said Clarke.
“My other concern is the raising of capital in the current economic environment. Only three to five per cent of active credit unions would be able to significantly fund the capital required to start up this bank. In most instances the investment funds of the credit union body will be used to invest in the Bank. This will reduce income for these credit unions as most of these credit unions rely on the investment income to maintain their surplus especially in the advent of possible taxation,” she explained. (PR/MM)
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