Consumer Chief To Banks: ‘We Can’T Take All Of This’


Tribune Business Editor


The Consumer Protection Commission’s chairman is openly questioning whether Bahamians benefit from foreign-owned banks, and urged this country to “get to the position where we say enough; we can’t take all of this”.

Jerome Gomez told Tribune Business that the commercial banks, especially those Canadian-owned, were imposing fee increases and restrictive lending practices at the same time as they were downsizing and sending Bahamian jobs ‘offshore’.

With decision-making power increasingly residing outside the Bahamas in Toronto, and Caribbean regional head offices, Mr Gomez said Bahamians were “better off doing things ourselves, as he repeated his call for more banking licenses to be issued to locals.

He admitted that he wanted to keep the issue before the public as a means “to put the pressure on the Central Bank” to become more proactive in regulating commercial bank fees.

Jamaica’s government last week announced that it was creating a financial services consumer protection agency specifically to regulate that country’s bank fees, following a public outcry over Scotiabank Jamaica’s move to charge a $385 Jamaican dollar fee to change a $5,000 Jamaican dollar bill into smaller denominations.

Applauding Jamaica’s move, Mr Gomez said the Bahamas should follow suit, suggesting the Consumer Protection Commission could set up either a separate Board or offshoot agency to tackle the issue.

He argued that Royal Bank of Canada’s (RBC) decision to close four branch locations, leaving Spanish Wells and Bimini without a physical commercial bank presence, was the latest in a series of burdens that foreign-owned banks had placed on Bahamians.

“They are increasing fees to the Bahamian consumer at the same time as they are moving back office operations out of the country, and laying off staff,” Mr Gomez told Tribune Business.

“What benefit are these banks to us at the end of the day, particularly the foreign-owned banks, moving back offices, cutting staff and increasing fees, all to add to the bottom line?

“We have to get to the point where we say: ‘Enough, we can’t take all of this’. We’re the biggest earner in the Caribbean, but they’re taking jobs to Jamaica, Barbados and Trinidad. All the head offices have gone to those countries as well. The country management are also figure-heads now; they hardly approve anything.”

All three of RBC, Scotiabank and CIBC FirstCaribbean International Bank have reduced staff and branch locations following the 2008-2009 recession, in response to the Bahamas’ weak economic environment that has resulted in low growth and high delinquent loan levels.

The trio have also consolidated back office functions in their Caribbean service hubs in Jamaica, Barbados and Trinidad, transferring jobs from the Bahamas to low labour cost countries, as they seek to drive efficiencies and cut expenses.

In response, Mr Gomez argued: “We are better off doing things ourselves, and I wholeheartedly support the issuance of more bank licenses to Bahamians and let your business compete. Whoever can’t compete in the market will have to close shop.”

He then criticised the Central Bank for its unwillingness to step in and regulate commercial bank fees, the subject of frequent Bahamian consumer complaints, suggesting it was too focused on macroeconomic monetary policy.

“We have to continue to put the pressure on,” Mr Gomez told Tribune Business. “I’m doing all this in the hope the Central Bank might stop for a moment and take a look.

“The Central Bank seems unprepared to do anything about it. They only seem to be concerned with foreign exchange and foreign reserves.”

Despite increases as high as 43 per cent on “a significant number of services” during the six months to end-June 2016, the Central Bank rejected direct intervention on bank fees through mechanisms such as price controls,arguing that these would only create further distortions that negatively impact consumers.

It, like the commercial banks, placed greater emphasis on improved consumer education and awareness, so that Bahamians could understand changes in fees and what drove them.

Mr Gomez acknowledged the ‘cause and effect’ between increased taxes imposed on the commercial banks by the Government, and the subsequent rise in many fees.

However, he argued that commercial bank profits were still high enough to ensure there was “room not to pass on every fee increase to Bahamian consumers”.

Recalling his recent meeting with Commonwealth Bank president, Ian Jennings, who was representing the Clearing Banks Association (CBA), Mr Gomez acknowledged that the 2015 imposition of the 3 per cent Business License fee had increased that bank’s licensee fees from $0.5 million to $5 million.

“When fees are increased on the banks, they increase fees to the consumer, so it’s a pass-on effect,” he told Tribune Business.

“I can understand that, and every bank trying to make shareholders happy, but when you’re making $50 million, $60 million, $80 million in profits, I think there’s room not to pass on every fee increase you have to the consumer.”

Scotiabank’s Bahamas profits more than tripled in 2016 to around $30 million, while RBC and CIBC generated net income of $61 million and $73 million, respectively. All three, though, remain significantly down on the net income they were producing prior to the 2008-2009 recession.

Mr Gomez, though, argued that the commercial banks “don’t seem to be doing anything to attract new business”, adding that they had effectively “shut out” small businesses from access to credit through “almost 100 per cent collateral” demands tied to cash and property.

The Consumer Protection Commission chair described fees as “the easy low hanging fruit”, which banks could increase with impunity as there was no regulatory oversight.

“Once one bank does it, everyone seems to fall in line,” Mr Gomez said. “It seems like a ‘follow the leader’ attitude. You never see the kind of healthy competition you see in the US.”


empathy 2 years, 1 month ago

There is much to admire in Mr. Gomez' discussion points that I simply have to say "I concur".

Probably the greatest disaster from these commercial banks is that their policies stifle small business' growth and development. Although the insane "Red Tape" that successive Bahamian governments have tied up businesses with have been equally bad. So unfortunately it's probably a pipe dream to expect a government agency (the Central Bank) to rescue us from this morass.


avidreader 2 years, 1 month ago

Perhaps the average reader is not aware that 5,000 Jamaican Dollars is worth about US$39.37 and 385 Jamaican Dollars is worth about US$3.03 at the present exchange rate of 1:127. Many Bahamians are not fully appreciative of the luxury we enjoy of having a dollar on par with the US dollar. The day that changes we will all suffer greatly from an instantaneous rise in prices here at home and not just when we travel abroad (as one of our young aspiring politicians remarked not so long ago). How spoiled we have become and how unprepared for devaluation if such an event should occur, an event that would signal the end of our standard of living as we know it.


sealice 2 years, 1 month ago

Hey Dumb Ass don't vote PLP this year and maybe the banks can come back???


ohdrap4 2 years, 1 month ago

the campaign has started to soften up the public.

yesterday's paper the web boss says he wants a banking licese, some or another official says 'people apply for licenses, not web shops'.

now this man starts the talk show circuits and newspaper.

just before the election. the fix is in.

place your bets and the rest of your money at the webshop.


stoner 2 years, 1 month ago

I worked in the Bahamas and ran a bank.God help your country if you close all Canadaian banks and open banks owned and run by Bahamians.All one have to do is look at what happened to fully owned Bahamain banks in the past. They all went bankrupt/closed due to fraud/ unpreforming loans and major write down/off of bad loans mainly granted to Bahamians Bahamians just don't have the capital/expertise/support to run a local bank plus in addition many Bahamians would want favorable considerable in services and specially the granting of loans, business or consumer.Personally, my experience has been that if you make an unsecured loans to Bahamians, it is a Bad Debt from the outset. Good luck if the Govt decide to move in this direction.Mr Gomez seemed to be talking like he understands the banking system.In my opinion, he has a lot to learn about banking in the Bahamas before moving forward in any direction of Bahamian owned banks.If Canadian banks are closed, good luck on the future of Banking in the Commonwealth of the Bahamas.Cash Machines and on line banking to include direct deposit is the way of the present and future.


OMG 2 years, 1 month ago

"check you tomorrow"a great Bahamian saying when owing or providing a service. Tragedy is that the genuine hard working entrepreneur get lumped in with all the others.


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