Barbadians should not expect any increases in interest rates on savings at commercial banks here anytime soon, one senior banker has warned.
Managing Director and Chief Executive Officer of Republic Bank (Barbados) Ltd Anthony Clerk said nothing had changed since the banks slashed interest rates to virtually zero nearly three years ago after the Central Bank ended the mandatory minimum rate of 2.5 per cent in April 2015.
The banks reacted by lowering interest rates on deposits to between 0.01 per cent and 0.15 per cent, blaming an excessively liquid banking system.
“Market forces came into play in terms of determining the rate and the rate had in fact fallen. I think that those market forces are more or less the same as they were then. So unless there is some major change in those forces then the deposit rates are likely to remain at a low level,” Clerk told Barbados TODAY in a recent interview.
The decision to slash the rates prompted accusations that the commercial banks were profiteering, given the range of fees associated with various accounts and transactions.
Among those pointing an accusing finger was Horace Cobham, the former head of the Barbados Bankers’ Association, who had said the commercial banks had “lowered lending rates, but not to the same extent they have lowered deposit rates. So their profit margins have increased”.
However, Clerk said there was no truth to the charges, arguing that the banks spend hundreds of thousands of dollars on social causes each year, using Republic’s own involvement in Crop Over as an example.
“Our corporate social responsibility is something we are paying attention to . . . . So it is not just about profit, it is about building and supporting the communities in which we operate,” Clerk insisted, adding that the bank spent approximately $400,000 last year and planned to spend a similar amount in the current financial year in support of various activities.