The Eastern Caribbean Central Bank (ECCB) is preaching consolidation in the banking sector in an effort to help minimise the increase in banking fees across the Eastern Caribbean.
According to Governor of the ECCB, Grenadian Timothy Antoine, there is a lot of developments taking place internationally within the banking sector resulting in extra costs for the banks.
Antoine made his remarks with members of the local media at the ECCB Agency Office on Monckton Street, St. George’s.
He said the reality of the situation is that banks now have to respond to issues of money laundering and tackling fraud.
“…Occasionally when credit cards get compromised banks have to pay for that technology to stay ahead, to be able to offer the online platform, all of those are costs that banks are facing. So it’s a tension there because you don’t want to see the fees, nobody wants to see them but at the same time the banks … their costs are rising and of course one of the answers ultimately is that we have to see more consolidation,” he told reporters.
Antoine said that part of the solution to the problem is the coming together of banks.
“You will still have choice, you will still have competition but given the rising costs and extensive nature of banking, you gonna see more consolidation in the banking sector,” he remarked.
The newly installed ECCB Governor also responded to concerns in the sub-region about increasing fees on the accounts of clients.
Antoine is advising banks to engage their customers on the reasons for the increase in fees and to give them an opportunity to understand the reasons behind the increases.
“As I said to the banks, they have a responsibility to explain to the public, to explain to customers what exactly is going on in the banking industry, what is going on internationally and give people a clearer line of sight of how decisions made outside are affecting them at home and that is something that the Bankers Association need to do.
“I’ve asked them to do that, I’ve challenged them to do more of that not just in Grenada but across the Currency Union because the demand (for) improvement in compliance will not go away and a lot of these things are being originated not by the Central Bank, not by the government, not even by the bank’s themselves but by international developments – international standard setting bodies imposing certain things on the bank and in some cases also unilaterally, certain countries.
“…Look at what is going on with corresponding banks, you’ve done business for years with a bank and then they call you and tell you they cutting off the relationship. When you asked them why, they tell you it is a business decision, no further explanation. So the banks have to scramble now and find new partners which are more expensive for them but they have no choice because a commercial bank cannot operate without corresponding banking relations.
“So it’s a very serious challenge and they will find a way but the truth is finding a way is costing them. That’s why you’re seeing these costs, which we are obviously very concerned about.
Due to the increase in fees, Governor Antoine stated that there are more and more people opening accounts with Credit Unions across the region.
He welcomed it saying, that’s better than putting it under your mattress…but that also raises the important implication of making sure that Credit Unions are properly regulated and supervised because more and more people are putting deposits in Credit Unions”.
He noted that in Grenada itself, more than half of the population are members of the Credit Union movement and as such “it is very important that we also make sure that the Credit Unions have a good standard of performance…”.
The Monetary Council of the ECCB has set up a committee made up of the Credit Unions, banks, bar association, and civil society to brainstorm a way in which the new emerging issues can be addressed.