Central Bank gets agreement from local banks on a change in fees for at least one account

- by Barbados Today April 27, 2023

In just over a month, all commercial banks in Barbados will be required to make at least one savings account available to customers that is free from fees or charges.
Governor of the Central Bank of Barbados Dr Kevin Greenidge made the disclosure on Wednesday, as he presented his first economic report as head of the island’s premier financial institution.
The new requirement is aimed at giving consumers an ease in bank charges, and Greenidge said the decision was taken following several meetings between officials of the Central Bank of Barbados and representatives from the five commercial banks operating here.
“The Central Bank continues to work with the commercial banks in addressing the proliferation of bank fees, which has become a source of public concern,” Greenidge said in his report.
“Following engagement with commercial banks on the topic of fees in recent months, all institutions have committed to make available at least one savings account that does not attract fees of any sort by June 1, 2023. This effort should improve customer satisfaction and lead to greater financial inclusion,” he said.
Greenidge told journalists that the Central Bank continued to work “hand-in-hand” with the commercial banks to make changes within the banking system, adding that some of them have already started removing the fees on at least one of their savings accounts.
“I am of the view that every Barbadian is entitled to a bank account. I am also of the view that the purpose of banking is financial intermediation, which is moving savings into investment and not the earning fees as your main arm,” he said, adding that he was not afraid to lead the changes required.
Stating that commercial banks deserved more credit than they are being given, especially when it came to their wide range of online banking options, Greenidge suggested that more changes in the banks’ fee structures were likely.
“In fact, I have committed that fees will be lower in Barbados going forward, starting with this savings account that carries no fee by every bank,” he said.
Currently, three of the five commercial banks charge a flat monthly fee ranging from $2.50 to $5 on savings accounts with minimum balances. The other two banks charge a fee of $3 and $10 respectively, if the account balance falls below $300.
Monthly fees on minimum chequing accounts range from $5 to as much as $15, with one bank having no monthly fees on this type of account.
There are no monthly fees on senior citizens’ accounts.
There are also no monthly fees on youth accounts. However, one of the commercial banks charges a service fee of $1 if the minimum balance in the youth account falls below $50
Minimum savings and chequing accounts across the commercial banking system also attract a range of other fees and charges for various in-branch transactions, from as little as $1.50 to as much as $15.
The requirement to offer at least one savings account that does not attract any fees from June 1, follows several changes in the banking system in recent years.
On November 1, 2021, the fee for Automated Teller Machine (ATM) transactions was capped at $3 if the customer used a machine other than their home bank.
In 2020, the commercial banking industry removed or reduced some fees on certain categories of retail accounts and in December 2022, the commercial banks were mandated by the Central Bank of Barbados to eliminate all fees on large deposits.
In April 2015, the Central Bank also removed the guaranteed minimum savings rate of 2.5 per cent, with the hope that more cash would be moved out of the banking system and into investment.
So far, however, this move has seemingly failed to meet its objective as local currency deposits continue to climb, reaching just over $13.2 billion at the end of the first quarter of this year.
Greenidge, who started his stint as Governor of the Central Bank on March 1, said work has already begun to move deposits into investments.
“For example, you may have some funds you are not interested in putting in the bank because you are earning nothing, a 0.1 or 0.5 per cent, but maybe you are interested in buying a bond that is tied to energy transition that earns you something while providing financing for an investor to invest. That is an ongoing work where we have to get those savings into investments,” said Greenidge.
(MM)

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