WILD COOT: A prodigal son
If Minister Donville Inniss were near me, I would shake his hand – that is, if he would allow me to. After years of pleading with the authorities, at last we get a common sense statement from a minister on the disadvantage of having only foreign commercial banks.
I have been chastising both our political giants that a country like Barbados has need of a locally owned commercial bank, and one that has the interest of the country at heart, like a cat among pigeons. Our economic landscape is at the beck and call of Trinidad and Canada and we cannot be too sure of it continuing for much longer. Well, Barclays has more or less moved on.
Way back in the 1960s, the foreign commercial banks experienced a change of policy. Not only was this change evident in their “Caribbeanising” the management of the banks, but also in the attitude towards local black businesses. It was a sort of experiment in lending large sums to up-and-coming black businesses. The unwritten policy at the time was to cater to prominent businessmen whose track record was already established. They were mainly white. If the connection, however tenuous, was some prominent white businessman or woman, then the loan application got favourable consideration.
Well, the plan to “Caribbeanise” management succeeded as the Wild Coot could attest, but the loan dispensation was an abysmal failure. Prominent black businessmen carried the banks to the cleaners – especially Barclays. Eventually banks had to write off a considerable amount of debt. Since then, foreign banks have been cautious in lending to black businessmen.
Up comes Tom Adams and decides to set up a national bank. The response was fantastic at first, especially as some deposits meant tax benefits for the customers. The bank would have been successful if politics had allowed it to be. But just like the present lot that are treating tax revenue like a cash cow, little respect was given to the bank. Just like the treatment of the National Insurance Scheme, the bank was hijacked with difficult loans, making it hard to compete.
Many times our people have rued the sale of the National Bank, especially as one witnesses the reluctance of foreign banks to play a more prominent part in the needs of the country.
So coming back to the comment that Minister Inniss is reputed to have made, I agree that a national bank is seriously needed. However, there is a caveat. It must be allowed to run in the interest of the people of Barbados.
But the minister spoilt his good works by supporting an imposition on the credit unions. He spoiled his favourable comment by supporting a further imposition on the banks as well. If I know my banking friends well, they will simply pass on the tax to customers. So taxing the banks and the credit unions only means that those organisations will simply pass on the tax. If you doubt me, just ask the Central Bank. Anybody notice the new board?
But Wild Coot, tell me something. If you were dispensing loans in today’s market, would you not do as the others? Well, I would have to say that an analysis of the present path of the Government does not make for good reading. However, putting on my old hat, I too would find ways of exacting vengeance on the customers. You see the present arrangement for paying interest for savings accounts? The Central Bank should be ashamed to let the banks dictate.
Banks decide whether or not an account can be designated ‘savings’, and hence whether or not to pay interest. For some commercial banks the effective spread is seven or eight per cent or more considering credit cards.
Harry Russell is a banker.