Closures Show Banking System 'Doomed To Fail'


Tribune Business Reporter


THE commercial banking model needs to be adjusted to suit the needs of the local economy particularly in the out islands, a Chamber of Commerce president said yesterday suggesting the current model is 'doomed to fail'.

Pedro Rolle, the Exuma Chamber of Commerce President made the observation on the heels of Bank of the Bahamas' (BOB) announcement that its Board of Directors has taken the decision not not to reopen its Eight Mile Rock Branch in Grand Bahama and to close its Exuma Branch, effective December 31 this year.

"Even though in Exuma we have Scotia and the Royal Bank of Canada I think that closing BOB is going to create an issue. I do believe that we have the business to accommodate the banks but I'm not so sure about the banking model as we have it now. The one size fits all model does not work. Banking has to be structured to suit the local economy and it needs to be more commercial in nature. Our banks needs to be able to accommodate persons engaged in farming and all the kinds of ventures. When you have models where they put so many requirements and conditions like they would in a big city don't think it offers locals the ability of take advantage of what banking should be," said Mr Rolle.

He continued: "The loan requirements are not suitable for the local economy. That is a huge problem. They need to adjust the model. The government may need to be more proactive or the Central Bank may need to give more leeway so that we can truly have local banks. For instance on the Family Islands you have many people who farm for a living and they should be allowed to access capital by using their crops as collateral. I believe that there are other jurisdictions which have models that have been successful in this regard."

Mr Rolle noted that banks generate most of their revenue from loans but argued that requirements are 'so stringent' that locals can't qualify. "Locals can't qualify for loans and so if they aren't lending they aren't going to be making money. They make money from loans not just service fees. That is why I believe the current model is doomed for failure. They will say what they are doing in the Family Islands is a service and they won't do that for very long."


bogart 1 year, 8 months ago

Not only fFamily island locals cannot qualify for loans but also Nassauvians. COMMON SENSE SHOULD HAVE THE GOVERNMENT ASKING WHY. Its the second largest sector and a business built on the sweat and hard work of many Bahamians of whom Sir Stafford stands out.

The banks are now allowed to do as they please without anyone looking out for the COMMAN BLACK MAN , or WHITE MAN




Well_mudda_take_sic 1 year, 8 months ago

Our entire banking system has been severely disrupted by the racketeering activities of the corrupt numbers bosses like Sebas Bastian and Craig Flowers. Like the previous corrupt Christie-led PLP government, the Minnis-led FNM government has made a fatal mistake in treating the money-laundering and other illegal actives of the numbers bosses as if they have somehow magically been made legal by the passage of legislation. It's akin to passing legislation to legalize the act of murder and than saying that all murders are now legally permissible. The bone headed idiots in our cabinet just don't get it and Minnis is top of the pile!!


jackbnimble 1 year, 8 months ago

I agree. Most gamble away all of their hard earned income. They no longer go to the local banks to save. It goes to the number houses instead and with all of that money only going in one direction small wonder the economy is failing.


JohnDoe 1 year, 8 months ago

How has our banking system been disrupted? Is it not enough that 2% of you conchjoe fellas control 85% of the bankable assets in this country? Why, without any evidence, do you continue to overtly call these black men criminals without also calling the above 2% the same. I believe in the rule of law, but the rule of law also states that a person is innocent until proven guilty. It is the institutional economy disenfranchisement of average Bahamians for over 100 years by this 2% combined with the banks discriminatory practices, unwillingness to re-invest in the Bahamas and poor strategic and management decisions that have disrupted our domestic banking system and led to such inhumane economic inequality that it now threatens our entire economy. At least these guys are re-investing in the Bahamas, something that cannot be said about the 2% that own 85% of our country. They must pay you very handsomely.


Well_mudda_take_sic 1 year, 8 months ago

@JohnDoe a/k/a @John: You don't believe in the rule of law. You believe in the right of corrupt politicians to pass legislation to circumvent the rule of law in quid pro quo arrangements. This is exactly what the corrupt Christie-led PLP government did when they wrongfully passed legislation (against the will of most Bahamians) purporting to 'legalize' the money laundering and other illegal activities of the racketeering criminal enterprises run by the numbers bosses. But you believe most in singing for your supper from the numbers boss who butters your bread. What a despicable creature you must be.


stillwaters 1 year, 8 months ago

If a lot of people in a country broke, don't have money to put in any bank, can't qualify for loans, of course, banks will start closing down. Everybody overlooks how important the money of the 'small' man is.


sheeprunner12 1 year, 8 months ago

The Government should ban webshops, nationalize ALL foreign-owned banks, encourage Bahamian-owned banks, open a national lottery and encourage each island to create a cooperative credit union to boost local financial independence and investment.


TheMadHatter 1 year, 8 months ago

Bogart...predatory lending reigns supreme. However if you say you want them to lend then it's hard to come back a couple years later and say you were preyed upon.

We need a new law to allow the establishment of a national credit rating system - like Experian AND a new law to allow Bahamians to declare bankruptcy (showing they are truly without assets) and thereby have all loans wiped off the books by the Court. Until that law is made, the banks have no incentive not to be predatory.


bogart 1 year, 8 months ago

Predatory lendong became more focused as banks moved their headquarters overseas where foreigners who knew nothing of the Bahzmian market culture people. Loan officers were encouraged to give out as many loans to win SUVs or cash prizes or vacations abroad for the most loans given out. Loan targets were then given to be met or else the loan offocer would not get a met target on staff appraisal for a salary increase. It is unlikely the applicant ever knew that the loan officer may not have been acting with due care and attention and the likehood og being negligent in using applicantion forms that were not as mathematicslly emcompassing as those now used. Legally all documentation is in favor of the lender to the point that the borrower in many cases is always indebted to the bank even after the property is sold by way of Judgement in Court. Today huge targets remain but with more Complisnce controlls, credit risk assessors etc and banks are now stringent as they should have been way before. The loan officer now is listed in a system that performance is computerized monitored so that everyone in the caribbean pipeline keeps track. Fully agree with Local Coops Credit Unions that deal with Bahamians by Bahamians, but we must have an indepemdent Banking Supervision and Audit team to balamce and correct wrongs done to the customer instead of the Central Bank where the Govenor and Board of Directors are appointed by the govt. Strict standards and punishments must apply to bankers. With 4000 mortgage accounts in default it is unlikely all ae solely to blame. Foreign banks reign supreme way above what Bahamian agencies should allow them to.


banker 1 year, 8 months ago

Almost every single foreign bank is looking for buyers or wants to leave the region. It is no longer a profitable business proposition to operate in the Caribbean. It was when the OECD and FATF were not around, but now, there is no money in the domestic marketplaces. Banks, by their nature, are predators.

I see a big future for credit unions in small markets like the Bahamas.


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