One senior banker is warning Barbadians that they will receive little to no interest on their savings for the foreseeable future, given the continued high levels of liquidity in the banking system.
Following the removal of the minimum interest rate of 2.5 per cent by the Central Bank of Barbados back in April 2015, commercial banks have slashed interest rates to between 0.05 and 0.15 per cent, while complaining that the financial system was awash with cash.
However, two years on commercial banks, despite reporting continued appetite among residents for personal and commercial loans, have maintained the virtually zero interest rates on deposits.
Recently appointed Managing Director of Scotiabank (Caribbean East) David Parks maintained that the financial system remained extremely liquid, suggesting that this and other factors were contributing to the extremely low interest rates on deposits at the moment.
“There is a lot of liquidity and I think there are some other things to work through before we would expect to see much of an increase again, with the liquidity that we have in our environment right now,” Parks said.
However, the Scotiabank official said Barbadians were still borrowing, with the interest rates on loans having also fallen to an all-time low.
Branch Manager for Scotiabank’s Warrens Sterl Lyons said customers continued to query interest rates because they were eager to see their financial circumstances “go into another direction”.
“Sometimes it is just a conversation on what types of investments are available in this economy. It might not be a savings per se but it might be an investment in real estate or an investment in other instruments that are going to grow them from where we are today. So we are spending time having those conversations with them and showing them the alternatives,” he stressed.
The Scotiabank officials were speaking with members of the media following a tour of the bank’s Warrens headquarters last week.
They explained that the financial institution was placing a heavy focus on digital expansion, pointing out that this move was customer driven and designed to make banking more convenient and comfortable for clients.
“We continue to work very closely with helping our customers achieve their financial goals and achieve their personal goals,” Parks said.
In light of the current economic difficulties confronting Barbados, Parks said Scotiabank remained confident and would continue its innovation and upgrades.
He also said the bank had ramped up its financial advisory services in an effort to better assist residents find financial solutions amid the current economic challenges.
“It won’t be easy, and I think again when economies are buoyant it is much easier for any business to have success, but when economies are difficult focus on certain fundamentals [is necessary] and those are the things I am really talking about, each customer one at a time understanding them and servicing them effectively . . . . My goal is to ensure that we deliver consistently day in, day out with every customer,” Parks said.