The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Concerns were raised yesterday about the prospect of further banking sector jobs losses, as Royal Bank of Canada (RBC) unveiled more consolidation plans for its mortgage-lending arm that are set to be implemented on Monday.

That is the date that BISX-listed FINCO will close its Palmdale branch, with all operations and customer accounts transferred to the nearby Royal Bank branch.

Nathaniel Beneby, Royal Bank’s managing director for the Bahamas, Cayman and Turks & Caicos, confirmed the move in a letter sent to customers of the FINCO Palmdale branch.

The letter, which has been obtained by Tribune Business, and is dated September 29, 2015, states: “We write to advise you that we will be relocating our RBC FINCO Palmdale branch effective November 2, 2015.

“The branch will be consolidated with the RBC Royal Bank Palmdale Branch (Palmdale Shopping Centre), creating a shared location.”

The move is a continuation of the initiative, begun in 2014, to merge FINCO’s operations and physical locations with those of Royal Bank in a bid to cut costs and generate efficiencies in a difficult trading and economic environment.

This has already led to the closure of FINCO’s former main branch in the Bahamas Financial Centre on Shirley & Charlotte Streets, and its consolidation with the main Royal Bank branch on Bay Street.

FINCO’s Prince Charles Drive-based mortgage centre was also merged with the Royal Bank branch there, with services also launched from their shared affiliates on Carmichael Road and in Freeport last year.

Explaining the Palmdale move, which is an extension of this strategy, Mr Beneby wrote: “Like all businesses, we constantly evaluate our operations to ensure that we match our service capabilities with the needs of customers.

“We believe the co-location of RBC FINCO Palmdale to RBC Royal Bank Palmdale branch, and combined over-the-counter services, will position us to provide more convenient and better service to our clients, and create greater efficiencies within our operations.

“We have regularly made adjustments in our branch network to ensure operational efficiencies and the long-term sustainability of our operations here in the Bahamas.”

Mr Beneby conceded that the Palmdale consolidation “may cause some initial inconvenience”, with FINCO customers’ accounts set to be transferred on Friday, October 30.

The Royal Bank managing director then indicated that the goal was to ensure FINCO’s operations are completely run via Royal Bank’s branches.

Mr Beneby said FINCO clients will be able to receive all over-the-counter services at every New Providence branch bar Old Fort Bay, Cable Beach and the airport come Monday, November 2. The latter three branches will be online by November 30.

The Palmdale consolidation is likely to result in some redundancies, given that Royal Bank will likely need fewer staff given the physical consolidation. It is also unclear what will happen to FINCO”s Robinson Road branch, which has yet to be included in this strategy.

Sources familiar with the situation at Royal Bank told Tribune Business that FINCO’s integration with Royal Bank was the last part of its Bahamas consolidation strategy.

“FINCO will cease to be a separate operational entity. It will be run through RBC branches,” one source told Tribune Business.

“If they’re not altogether yet they will be in the next few months. It’s all part of a consolidation, but this is the last part of it.”

Agreeing that some redundancies were likely to result, the source added: “Certain RBC people have been told that their jobs have been put up for auction and they have to reapply. There are people in RBC being told they will be laid-off because there are no jobs for them.”

Tribune Business previously revealed that FINCO, or Finance Corporation of the Bahamas (FINCO), cut staffing levels by one-third in its 2014 financial year, taking the reduction in its workforce to 50 per cent over the preceding five years.

Its 2014 annual report disclosed that its staff count dropped from 95 in 2013 to 63 at end-October 2014, a decline of 33 per cent.

This continued the downsizing trend that FINCO has seemingly been on since 2010, when its workforce was 126-strong. Current staffing levels thus represent a 50 per cent reduction on what they were in 2010.

Tribune Business said at the time that the increasing integration with RBC’s main Bahamas’ operation has resulted in the transfer of jobs to the latter, and headcount consolidation.

Royal Bank’s further cost-cutting will come as little surprise to most informed observers. FINCO’s more than $100 million worth of non-performing loans means it has been saddled with reduced interest income and increased loan loss provisions for the past seven years, depressing profits and shareholder returns.

With the Bahamian economy stuck in a low-growth cycle, new lending opportunities and qualified buyers are few and far between, and FINCO has been stuck with hundreds of distressed properties it is unable to sell.

This situation will now be further exacerbated by the 2,000-plus Baha Mar lay-offs, with Tribune Business sources suggesting that unpaid credit cards and auto loans extended to those workers are starting to mount.