Central Bank designation on big credit union

Barbados’ largest credit union, the Barbados Public Workers Co-operative Credit Union Limited (BPWCCU) has been designated by the Central Bank of Barbados as a “systemically important financial institution”.

This designation has resulted in it coming under the watchful eye of the Central Bank, even though it is a non-bank financial institution that is already regulated by the Financial Services Commission (FSC).

The island’s two main regulators of the financial system are the FSC and the Central Bank. The FSC regulates the operations of credit unions, insurance companies, mutual funds, pension funds and securities. On the other hand, the Central Bank regulates banks, merchant and trust companies, as well as non-bank deposit-taking financial institutions such as SigniaGlobe and ANSA Merchant Bank.

However, given the size and impact of BPWCCU on the local financial landscape, the Central Bank has redesignated this credit union for additional scrutiny.

During his recent address to the annual general meeting of the Barbados Cooperative and Credit Union League at the Lloyd Erskine Sandiford Centre, president Hally Haynes informed delegates the regulatory arm of the Bank has been extended to BPWCCU.

For the year ending March 31, 2021, BPWCCU reported assets of $1.82 billion and net operating income of $66.51 million.

“Whilst the FSC is the credit union sector’s prudential regulator,  the Central Bank, under the recently amended Central Bank Act, has responsibility for financial stability and this requires it to have a close eye on the performance of all financial institutions, especially those that are deemed to be systemically important, including credit unions.

“It is noted that Barbados Public Workers Co-operative Credit Union Limited has already been designated as a systemically important financial institution and it is likely that City of Bridgetown Cooperative Credit Union (COB), may also be so designated.”

Haynes reminded credit union representatives that the Central Bank was also the regulator with responsibility for the National Payments System and the Credit Bureau Services.

He cautioned that against this backdrop, now is the time for the sector to “look more closely at further consolidation and may I say at a faster rate”.  He added: “Member societies must seriously examine their circumstances to determine if their operations can be sustainable in the current and emerging environment.”

In a wide-ranging presentation to credit union leaders, Haynes also disclosed: “During the lockdowns, thousands of members of the credit union movement did not have access to their accounts, and we must move with alacrity to ensure that all members of the credit union sector have access and access is not limited to members of the large credit unions.

“To this end, your League is examining the possibility of deploying a national level electronic payment platform for the island.” (IMC1)