Caution urged with credit union bank
AFTER MUCH TALK about the need for a credit union-owned commercial bank, we heard last weekend that the credit union movement (or should that be the Barbados Cooperative and Credit Union League?) had indeed agreed to go ahead with such a venture.
Former Central Bank Governor Sir Courtney Blackman, consultant on the project, has suggested that Capita Financial Services, owned by the island’s largest credit union, Barbados Public Workers’, be transformed into that bank.
It is a bold move which is going to call for much more than sentiment and goodwill.
It is easy to suggest that the majority of credit unionists in Barbados will readily support this proposed bank, but we need to have the hard facts to ensure this becomes reality. The movement already has an insurance company that has struggled for many years and has not won the overwhelming support of the credit union membership base.
People want choices and demand excellent service and will determine whom they do business with based on these characteristics, not sentiment. This is particularly true of their money, given the turbulence in world financial markets in recent years.
The chief executive officer of the City of Bridgetown Credit Union, Steve Belle, has already raised a number of pertinent points as it relates to the setting up of a credit union bank and has suggested some things the movement ought to consider. His position is perhaps a good starting point for broad-based discussion.
There are many things the Credit Union League, which is taking the lead on this matter, needs to answer publicly, and given the rich tradition of the credit union movement where every member has a voice, the league should hear from all its affiliates since this move to establish a commercial bank must not redound to the benefit of a few, but the many.
We take the lead by posing a few questions to help further the discussion.
What is the actual number of credit unionists in Barbados? How many of them are “dormant”, “very deliquent” and even “deceased”?
Do members of credit unions benefit from deposit insurance?
How many credit unions are there in Barbados and how many meet the capital requirements?
Indeed, how many of the credit unions are viable?
Who will get the retained earnings from the proposed commercial bank?
What guarantee is there that the planned bank will not poach business from credit unions?
What will be the ownership structure of the “new” Capita?
Will there be different classes of shareholders?
Will this credit union-owned bank operate like all the other commercial banks?
Has a survey of credit union members and indeed the wider public been undertaken to determine a need for this bank?
Shouldn’t the credit unions focus first on certain shared services to enhance efficiency and effectiveness ?
We agree that the credit union movement must grow and bring the best returns for its members. We understand the passion and the desire, but we urge caution. A credit union-owned bank must not serve to undermine or destroy the credit unions.
This exercise cannot be about assuaging egos. Confidence, security and peace of mind for customers and members will be the key factors in this venture.