By Marlon Madden
General Manager of the Barbados Co-operative & Credit Union League Ltd (BCCULL) Anthony Pilgrim is reporting a slow return of confidence by the credit union sector in Government paper, five years after the Mia Mottley administration’s debt restructuring.
He said while there has been some take-up of the Barbados Optional Savings Bonds (BOSS) bonds by some credit unions, others remained hesitant given the bitter taste left by the 2018 debt restructuring that saw the sector losing hundreds of millions of dollars.
“Specifically as it relates to the appetite for Government paper, while I can’t give you any statistics on that, we are all aware that Government is making a significant effort to stimulate the investment market. We have had the BOSS bonds and now we have the BOSS Plus, and there has been some level of take-up by the credit union sector as well,” reported Pilgrim.
“It is normal after a debt restructuring for there to be some shyness as it relates to placing investment and, in this case, in Government paper. But there has been improvement as it relates to [that]. What is key is rebuilding that confidence. That is what has to happen and that is not an overnight process, but there is some uptake. I know that credit unions have started to reinvest again in Government paper.”
Pilgrim was responding to questions from Barbados TODAY during a press conference on Wednesday.
He suggested that the Government could consider giving the credit union sector, which now boasts $3 billion in assets, more leeway to invest.
“I would say that we in the sector believe that there could be some relaxation of the tightness, but not at the sacrifice of the financial health of institutions,” he said.
Under Section 34A (b) of the Co-Operatives Societies Act, credit union funds are only allowed to be invested in Government securities; securities issued by a Barbadian company or a company incorporated in a CARICOM member state; securities issued by a credit union in a CARICOM member state; real estate based on specific provisions or “any other manner approved by the Registrar”.
Pilgrim said even as the credit union sector seeks investment options, the protection of members’ deposits remained a top priority.
“It has to be understood and appreciated that credit unions are the custodians of significant deposits placed by our members. Many of our members, although a bit diversified, still have modest means,” he said.
“Financial institutions have to be very careful as to how they invest funds because there are always risks. Ideally, you want to have your most significant investment in the form of loans to members and that is where you get your best return, and not just the best return, but the best return with the lowest risk,” added the senior BCCULL official.
