By NATARIO McKENZIE
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."