The recent public outcry over the low interest rates being offered by commercial banks has not escaped the attention of Prime Minister Mia Mottley.
In fact, she has indicated her willingness to work closely with the financial institutions to find a win-win solution.
Since the removal of the minimum interest rate of 2.5 per cent on deposits in April 2015, commercial banks have been slashing their returns on deposits, now offering between 0.1 per cent and 0.15 per cent. At the same time, the banks have been increasing their fees.
FirstCaribbean International Bank (CIBC) was the latest to announce new charges, including a $3 fee for over-the-counter deposits and a $10 monthly service charge for chequing accounts.
The bank also abolished its average balance requirement fee for accounts falling below minimum amount but imposed a standard monthly service charge of $5 across-the-board.
The move has drawn the ire of Barbadians, including Government Senator Lynette Holder who reacted immediately to FirstCaribbean’s imposition at the start of the month by urging residents to remove their savings from the commercial banks and to put them in credit unions and other deposit taking institutions. However, addressing the official opening of the CIBC Warrens Great House on Wednesday evening, Mottley said a national discussion was needed on the issue.
“I look forward for our respective teams continuing to work together for a solution that will be of benefit to your institutions, to your shareholders and to the people of Barbados because what we do know is that we could not go forward with a solvency issue,” the Prime Minister said.
“We accept that banks are not in the business of wanting to hold real estate either and therefore we will have to find a way where our citizens. . . will be able to hold onto their assets while negotiating these difficult and choppy waters,” she added.
In her wide-ranging address, Mottley suggested that Government would also have to incorporate non-traditional methods of tackling the economic challenges facing the country, with the help of all stakeholders.
“We have to work together and think outside of the box without necessarily affecting your balance sheet in a negative way but also recognizing our obligations as a Government to protect our citizens and to be able to ensure that their most important investment . . . can be maintained but in a way that makes sense to everybody,” she said, while expressing confidence that Barbados would see an “explosion” of investment in the coming years.
Also touching on the issue of de-risking which has been plaguing the financial community for several years, Mottley contended that it stood to cut off the region from the rest of the world if not urgently addressed.
She argued that “simple, idle references without trying to get to the bottom, and to have clear conversations that remove the yoking of sovereign nations is what is required if banks are not to take the unfortunate blame for what really has not been something that has been started by them.
“It is a matter that requires engagement of leaders at the very highest level and an underpinning of respect for the sovereignty of individual nations if we are not to see negative consequences develop,” Mottley added.