A Guy's View: Held hostage by banks
Outrage has been expressed in some quarters by the recent information circulating about the bank charges which have been advertised under the name of CIBC First Caribbean International Bank. Although discomforting, one should not be entirely surprised.
From the information which was circulated, the following fees are being charged:
Regular Chequing Accounts: monthly service charge $10.00. There used to be an average balance or minimum limit below which the charge would apply. That has been removed.
Savings Plus Accounts: over-the-counter withdrawals or deposits, $3.00. Monthly service charge of $5.00.
Regular Savings Accounts: over-the-counter withdrawals or deposits, $3.00. Monthly service charge $5.00.
The net result of this is that customers of the bank are paying the bank to keep and use their money. There is no need to conduct any business beyond holding an account with the bank. Further, any time you walk into the bank, you pay. This must be juxtaposed against the marginally above zero per cent interest rate the banks are paying on your savings and the rates they charge when you borrow your fellow savers’ money.
Unless CIBC has a death wish, its management must know that there are charting a course that has already been decided on by their “competitors” in the market; unless, of course, they have Trump-like confidence that they could shoot their customers and still not lose any of them.
Barbadians sometimes develop brand-loyalty based on length of relationship. Many persons can tell of banking with the same financial institution for more than 20 years. Over time, personal relationships develop and one may become comfortable with one’s banker. That may have been alright when needs were simple and bankers actually helped in the attainment of financial goals or the acquisition of significant assets. They worked with customers almost as partners in pursuit of a common goal.
Those days are over. The customer is now no more than an object of profit. In the current environment, customers may be doing themselves a disservice if they remain loyal to a bank that is not loyal to them.
There is no Barbadian-owned bank which may place the interests of Barbados and Barbadians over naked profits. As a result, the helpful element may now be gone from banking. It may now also be true that Government has no leverage in the financial market place to influence behaviour rather than accepting the positions that may be entirely driven by market forces.
Of course, should it be thought necessary, tomorrow morning the Government could move to end the rape that at least one of its spokespersons has strongly condemned. However, such an intervention may be challenging unless it is moving to regulate the entire industry as opposed to a single outrider.
Central Government action aside, the Central Bank of Barbados and the Fair Trading Commission could also act to stop an unfair state of affairs, but those institutions clearly see nothing wrong with what the banks under their supervision are doing. Any discussion about what banks are doing in Barbados, therefore, must take place against the background of the full understanding that these entities are not a law unto themselves and if they run unchecked it is because they are allowed to do so. Feigned objection to what they do must be viewed in this light.
At a deeper level, one must question the psychology of the decision to manage a sovereign country without an indigenous commercial bank. This question is especially pertinent in light the fact that the Barbados National Bank, and the Development Bank, were jointly thought to be a necessary cog in the wheel of this country’s general development.
Did the players in our financial sector become so divine that there was no longer a need for any Barbadian interest to be present in the market to provide an alternative facility or option, either to Government or individuals who used those services? Foreign owned commercial banks operate in the markets they identify for one purpose only – profit. What would have driven us to believe that Trinidadian businessmen would operate any differently?
No Trinidadian, nor Canadian businessman invests in a bank for that bank to provide social services in Barbados. Trinidadian business interests will not always be consistent with what is best for Barbados. That explains why, when we had a competitive manufacturing sector, there were periodic trade tensions between the two countries. Such tensions have disappeared because Trinidadians now own practically all of the manufacturing processes in Barbados. To make it plain, our manufacturing sector, to the extent that it exists, is mainly a satellite location for Trinidadian producers.
As the manufacturing sector has gone, so too has the financial sector. There is complete Trinidadian domination, with a few survival entities holding on. In the financial sector, credit unions are the hangers on.
There is no reason why credit unions cannot provide all the services that the commercial banks now provide, but they continue to be prohibited from doing so.
Why? Whatever the reason, it is not one that reflects the best interest of the ordinary Barbadian who has to suffer at the hands of a predatory banking system.
A commercial bank owned by the credit unions need not bring an end to credit unionism. The need for credit unions may not disappear, but the idea that credit unions must collect their members’ money and cart it to a commercial bank is unfortunate and reminiscent of the plantation setting up a village shop and the law prohibiting any competition. In such a case, the law is not an ass, but a villain.
Economic control in modern Barbados is not very different from slave or colonial Barbados. The treatment of the credit union movement is evidence that the law is still being used to protect one class and keep out another. The bondage continues.