Following a constant outcry from individuals and small businesses over what seem to be sustained increases in commercial bank fees, the island’s premier financial institution is suggesting that a policy be put in place to regulate at least some of them.
Governor of the Central Bank of Barbados Cleviston Haynes pointed out that he was aware of the cries of residents and suggested that a “minimum standard” was needed to help guide bank charges.
“As I have said in the past, there are so many fees that the notion of controlling all of them is not practical and realistic but we need to come to some understanding as to what is the minimum standard that we would want for the banking system,” said Haynes.
Governor of the Central Bank of Barbados Cleviston Haynes speaking with chief of the bank’s public communications Novaline Brewster at today’s media briefing.
He implied that the bank fees were excluding some residents from the commercial banking sector, and indicated that he would soon be meeting with representatives from the banking community on the issue.
“We have received complaints. I can say to you that we, too, are concerned about the frequency and level of fees. It is a matter which we will discuss with bankers. As we understand, our legislative framework at present doesn’t really give us the authority to set fees,” said Haynes.
The central bank governor was responding to questions on Tuesday, as he presented the economic report card for Barbados for the first nine months of this year.
“We have in the past discussed with the banks and we will do it again, look at certain fees that they have. We do not believe that we should have a situation where our banking system, by the fees that it charges, generates a lack of inclusion for the ordinary citizen. The ordinary citizen ought to be able, if she or he so desires and is able, to open and maintain a banking account. Therefore that is a discussion which we will be having with the banking sector when we meet with them,” he said.
“We have heard the complaints, we have seen it as individuals, we have seen it on our own accounts on a daily or monthly basis and therefore we are going to have that conversation with the banks to try and address this situation,” he added.
The central bank is the supervisor of the commercial banks in Barbados.
Over the past few months there have been mounting complaints as commercial banks announce new or increased charges for various transactions including over-the-counter transactions and deposits.
Earlier this month Minister of Transport Dr William Duguid hinted at the need for bank fees to be regulated, pointing out that they were becoming too onerous.
In relation to the minimum savings rate, which the central bank removed in April 2015, Haynes said there was no immediate determination to set a new one given the “quantum of liquidity in the system”.
It was hoped that with the removal of the guaranteed minimum savings rate of 2.5 per cent, there would be more movement of cash out of the banking system and into investments.
However, the central bank report showed that for the nine months ending September 30, there was a decline in lending to the private sector from deposit-taking institutions by about 0.9 per cent while local currency deposit increased by 1.1 per cent, culminating in “a further build up” of excess liquidity in the system.
“I think what we anticipate is likely to happen as the economic improvements take place is that there will be a pick up in the demand for loans in the banking system. Even so, there is so much excess liquidity in the system that that will not be eliminated overnight even if we get that picked up. I don’t think that at this point in time we want to say specifically that we want to re-impose a floor because the quantum of liquidity in the system is really inconsistent with setting a floor that is much higher than where we are at this point,” Haynes explained.
The current average interest on deposits stands at a meager 0.2 per cent.
Also commenting on foreign currency accounts, Haynes told journalists that following the relaxing of the regime allowing for such accounts locally, starting August 2, there was still no massive take up.
He said based on discussions with the banks there have been several individuals who have expressed an interest in opening foreign currency accounts “but for a number of reasons these have not yet materialized”.
In delivering his review on the economy, Governor Haynes reported that while foreign currency deposits had increased some 4.2 per cent for the first nine months of this year, compared to the 16.5 decline for the same period last year, there was no significant change following the liberalization of foreign currency accounts two months ago.
“That is something we believe will change over time . . . over time we anticipate that there will be a build up in the foreign currency accounts held by Barbadians in the Barbados banking system,” said Haynes.
marlonmadden@barbadostoday.bb
