The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The Central Bank's governor says an improved lending climate and reducing the costs of doing business are critical to lowering the commercial bank fees hated by many Bahamians.

John Rolle, addressing the opening of the Central Bank's Financial Literacy symposium at the Fusion Superplex, said bank fees and their increase must not be viewed in isolation but assessed against what is happening in the wider economy and lending environment.

"If we improve the long-term growth potential of our economy, it would increase the earnings potential from credit, which ought to be the principal driver of bank profitability," Mr Rolle said. “Private credit has contracted on average in the last decade. Reversing this trend would, along with other worthwhile consumer protection measures, help in a sustained way to ease the pressure on fees.

“We must also be able to consider sufficiently how positive reforms in our economy can help to make the operating environment more efficient, and also contribute to better outcomes. That is how reducing inefficiencies such as the high credit delinquency rate by international standard, the cost of providing electricity, or the cost of handling cash could help to improve outcomes."

Describing "financial inclusion" as being at the heart of the Central Bank's current initiatives, he said: "The Central Bank is actively pushing to improve what still remains a less than satisfactory experience in opening accounts at domestic banks, including for businesses and domestic banks have taken on the challenge to identify reform practices, including changes in government policies and central bank regulations that could specifically help to reduce the amount of time that it takes to open a business account.

"A target that has been set is to reduce the average experience to less than two weeks. Feedback from the business community is that it is now taking [much] longer than this on average to conclude the process. Regarding the personal banking experience, in the last month, there has been further easing of the Know Your Customer or the KYC requirement, so that a Bahamas driver's licence is sufficient ID, by itself, to open a bank account for low-risk clients.

"This characterises the substantial majority of persons who present themselves to open a deposit account. Similarly, in some cases individuals can now use their expired Bahamas passport or their expired Bahamas driver's licence to supplement lesser forms of official IDs that they might use," Mr Rolle said.

"In the extreme, where photo IDs are not available, the Central Bank has affirmed again that domestic banks, credit unions, money transmission businesses and payment services firms can still rely on written references from trusted sources, where there is potentially a low-risk of money-laundering associated with the account."

Mr Rolle said the Central Bank still needs a new headquarters building from which to operate as it proceeds with plans to construct a new Cash and Data Centre off the Frank Watson Highway near Adelaide in southwestern New Providence.

While its new headquarters will not be at Royal Victoria Gardens in downtown Nassau any more, the regulator is still looking for larger accommodation because of security reasons and the fact it has outgrown its current offices on Frederick Street.

Mr Rolle said: “We do anticipate that we are going to have to invest at some point in additional accommodation. But it's not going to be on Royal Victoria site.” While giving no timeline for when a new site will be identified, Mr Rolle said the new Cash and Data centre will enable the Central Bank to discontinue handling cash downtown.

He added: "That'll be our new currency operations. And it will be a backup facility for our computers. It's a security hassle being downtown, even for the commercial banks that have to come in and out of the Central Bank. And so just moving away from that congested area, it's going to be safe, not just for those who are handling it but for people who are typically in the neighbourhood when that's happening.”