NASSAU, BAHAMAS — Progressive Liberal Party Deputy (PLP) deputy leader and Opposition Finance spokesman Chester Cooper yesterday said credit unions deserve a ‘level playing field’ to compete.
Cooper underscored more should be done to foster the growth of local banking and financial institutions, during his contribution to parliamentary debate on a compendium of bills, namely; The Central Bank of The Bahamas Bill, 2020, The Banks and Trust Companies Regulation Bill, 2020, and The Protection of Depositors (Amendment) Bill, 2020.
Cooper noted that the Protection of Depositors (Amendment) Bill extends deposit insurance to credit unions for the first $50,000 of deposits.
“Under section 5 of this bill, the inclusion of credit unions is a welcomed addition,” he said.
“This is something that has been called for quite some time by the industry, the public and would be celebrated by credit union clients. Credit unions are home-grown institutions that deserve a level playing field to compete in The Bahamas.
Cooper said: “In my view, more should be done to foster the growth of local banking and financial institutions. We often roll out the red carpet to the foreign banks, allow them to export profits then wring our hands when they move their head offices, increase fees and hold back on lending domestically. If credit unions are given a chance to compete, we could capture more of the wealth in this sector domestically.”
He added: “Any effort that builds confidence in our financial institutions is welcomed. This bill will insure against loss of deposits and will contribute to the stability of the financial systems. This, in and of itself, is a positive move.
However, Cooper also noted concerns about the selection of the board of the Deposit Insurance Corporation, substantially by the minister. He suggested the board could receive recommendations from stakeholder groups like the Chamber of Commerce or professional bodies like the Bar Association.
While he argued there should be more independence, like Central Bank, Cooper said the opposition supported the bill in principle.
Cooper furthered there were some concerns with the Bank & Trust Regulations Bill.
“This bill seems to be designed to give more teeth to the regulatory regime to deal with the supervision of a troubled bank,” he said.
“When we look at an “asset management vehicle”, we wonder why would the government own shares in a company established for the purpose of receiving an asset of a bank under statutory administration. The government might theoretically hold all of the shares.
Cooper said: “This looks offensive. This might cause some concern for bank owners as to whether a rogue government administration might use this tool for compulsory acquisition. I don’t see the need and we should delete that reference to avoid mischief. Someone will need to explain why this is necessary when I assume, in the case of an action against a bank, the Statutory Administrator would have all rights as a receiver or liquidator.”
Cooper went on to assert that “banking is far too difficult in this country”.
“That is for many reasons, but for the most is because the big banks want to do business in The Bahamas without adapting to the culture and archipelagic nature of this country. We have seen mass and heartless branch closures in the Family Islands, leaving some islands like Long Island bank-less. Therefore, many of the people in our country are left unbanked.
Cooper said: “Easy access to financial services, essential economic empowerment, small business development and ultimately national development. There is also a problem with our regulatory regime in that we impose these rigid conditions on doing business in this country, Onerous KYC, limiting services, charging for every little thing, even for account holders. Because of the numbers of those unbanked, we support the use of more electronic means of payments inclusive of the new digital currency, the sand dollar.”