Thu | Aug 17, 2017

Tony Deyal | High rates of the Caribbean

Published:Saturday | March 4, 2017 | 3:00 AM

The problem with political jokes, as is so evident in the Caribbean, is that they very often get elected. The problem with banker jokes, as frequent these days as complaints about the sudden, unexpected and astronomical rise in bank charges, is that bankers don't think they're funny and we ordinary people don't think they're jokes.

If I used the classic definition that bankers are people who help you with problems, you would not have had without them, you would agree, nod your head sagely, and perhaps add Mark Twain's observation that a banker is a fellow who lends you his umbrella when the sun is shining and wants it back the minute it begins to rain. Even central bankers.

One who is giving away our country's savings to the politicians has glibly explained that the rise in bank charges, which he can do nothing about, is caused by competition among the banks. It is the first time I ever saw competition increasing instead of decreasing prices.

There are three Canadian banks in the region. According to the prestigious Canadian newspaper, The Globe and Mail, "By 2008, the three Canadian banks had $42 billion in assets across the English Caribbean 2.5% of their combined total assets, but more than four times those held by the 40-odd locally owned banks. With such a dominant footprint, RBC, Scotiabank and CIBC hardly had to spend to build brand awareness they could milk money just by being there."

Six years later, in 2014, CIBC, based in Barbados, made profits of $593m in the Caribbean and an overall $13.48 billion. Scotiabank made $1.2 billion in the region and $23.6 billion globally. RBC, based in Trinidad, made $861m regionally and a total of $34.1 billion, almost $11 billion more than Scotiabank and $21 billion more than CIBC.

 

BANKS ADDING FEES

 

These big profits have not gone unnoticed or ignored. On June 14, 2016, a CBC News headline read, 'Canada's major banks hiking fees while pulling in big profits: Banks are raising fees on select personal banking services even as many are seeing revenue increases'. The CBC revealed that in 2015, Royal Bank added some new transaction fees for payments on their loans, mortgages and credit cards, but these sparked such a huge public and political outcry, the company axed them.

At the time, RBC said it had changed its policies because it was listening to customers. But CBC went on to say, "Royal Bank is the only big Canadian bank that hasn't announced any personal banking fee hikes in this country this year. But it's still facing the wrath of customers in the Caribbean. Some RBC Caribbean clients are so upset over new monthly charges, they lined up for hours to close their accounts."

The article by Sophia Harris stated, "RBC wouldn't confirm details to CBC News, but it appears that customers in at least seven Eastern Caribbean countries including Antigua and Barbuda, St Lucia, St Kitts and Nevis, and St Vincent and the Grenadines are now facing a monthly charge of 25 East Caribbean dollars (CDN$11.75) for some personal bank accounts. Seniors with an RBC Sixty Plus account will be charged a $12.50 XCD (CDN$5.88) monthly fee ... . The bank rolled out the new charges between May 23 and June 20 at a time when it's enjoying multibillion-dollar profits. Numbers released at the end of May showed RBC boosted its second-quarter profit by three per cent to CDN$2.57 billion . ... So many people chose to close their accounts. Police in St Kitts and Nevis even sent out an alert, urging RBC customers to use caution when withdrawing their money."

While RBC is not alone in its massive fee increases and the other two Canadian big banks are doing the same, the "different strokes for different folks" is my major concern. Even though it backed down under public pressure in Canada, RBC's behaviour in the Caribbean seems to be vindictive, uncaring and an attempt to make up for its potential losses in its home country.

What I found out is that its image in Canada is also really bad and its overall satisfaction rating on the Consumer Affairs website is one out of five stars. Additionally, RCB has chosen NOT participate in the Consumer Affairs accreditation programme. The site features the top 196 complaints about the bank. Scotiabank does not fare much better. One customer said it is the worst institution to deal with.

 

NO REASON

 

A complaint about CIBC, which has been repeated by one of my Trinidad-based Facebook friends, is, "When CIBC raised my line of credit interest rate from 7-11% for no apparent reason and refused to do anything about it, I tried calling and also made an appointment to meet with them, but all they would do is blame the computer and offered no explanation as to why the rate would suddenly jump. The message was, I'm not a customer at all, but rather someone they're doing a favour for."

The banks are claiming that they are suffering from "impairment" losses from bad loans and such like. The Globe and Mail pointed out something with which we are all too familiar - the bankers and their cronies did very well. The paper stated, "Much of this mess dates back to practices put in place years ago in some cases, before the Canadian banks made their Caribbean acquisitions ... . If, for example, a client had a good relationship with a branch manager, he or she could simply call up and get extra credit, regardless of their banking profile." For me, the biggest impairment is their lack of concern for the people of the region.

As Peter James Hudson pointed out in Imperial Designs: the Royal Bank of Canada in the Caribbean, the ideologies of Canadian Anglo-Saxonism shaped the Canadian financial elite's vision of its role in maintaining the integrity of the British empire. The sun has now set on that empire and is getting dimmer for its camp followers. This is perhaps why RBC and the other Canadian banks are, to quote The Globe and Mail, behaving "like someone who wants to sell a house (and) is renovating simply in hopes of fetching a better price".

- Tony Deyal was last seen asking if the banks are so rich and so customer friendly, how come they chain down their pens in their Caribbean branches?