The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemdia.net

The Foreign Minister said yesterday that Canadian banks were making “good money” in the Bahamas, and that despite incurring significant losses in recent years they were not going anywhere.

Fred Mitchell also suggested that the Canadian-owned banks should accept some moral responsibility for “pushing credit” on consumers, and be willing to work with them if and when they defaulted on their loans.

During a presentation in Parliament on the Banks and Trust Companies Regulations Act, Mr Mitchell said: “The fact is this jurisdiction makes good money for these banks, and this temporary trough is not going to cause them to withdraw and go anywhere; not for a minute, not for a day, a month, a year, not even for an hour. They won’t do  it. This is a profitable business for these banks.”

    Major losses incurred by the Canadian commercial banks over the past several years has given rise to speculation that at least one could withdraw from the region.

Mr Mitchell said yesterday he did not con side this a practical possibility, given that Scotiabank, Royal Bank of Canada and CIBC First Caribbean were doing good business in the Bahamas.

   Royal Bank of Canada has already revealed it would be withdrawing from the private wealth management business across the Caribbean, a move that would affect 30 jobs locally.

The move follows a Caribbean-wide restructuring last year, with RBC selling its Jamaican operations to Sagicor. Fellow Canadian banks, CIBC FirstCaribbean International Bank and Scotiabank, have also initiated downsizing to cut costs and combat heavy loan losses that have reduced profitability in both the Bahamas and the Caribbean.

Mr Mitchell yesterday suggested that banks should accept some moral responsibility for “pushing credit” on consumers.

“There was an era in this country when all banks without exception were pushing credit. There was an era prior to 2008 when that is what they did,” he argued.

“Credit officers were given certain targets that they had to meet, and they went out and met them. After 2008 there was a crash, and suddenly the credit officers who were Bahamian were being blamed for pushing too much credit when, in fact, the quotas were set for them. Then, the banks themselves accepted no moral responsibility for pushing credit on people.”

Mr Mitchell added:    “When people got into problems, the banks which were advertising accepted no moral responsibility for pushing credit. If you accept that you have some moral responsibility for pushing credit on people, you should also accept some responsibility for renegotiating the deal when things go bad. 

““I think whether it is on consumer loans or mortgages, the banks in my view have a  moral obligation to settle these matters with people and to take a haircut if it’s necessary because they never lose.”