Barclays says Jamaicans too risky, closes accounts
Barclays Plc confirmed Thursday that the UK bank has removed Jamaicans from its client rolls, saying that a new initiative to close out accounts for those having Jamaican addresses was in line with its push to reduce risk and shore up core business.
The closure of the UK accounts take effect today, September 11, and some 450 clients will be affected, the bank told the Financial Gleaner.
Jamaica is one of some 130 countries with which the three centuries-old bank signalled it is cutting ties.
The decision by Barclays was highlighted this week when Jamaica National Building Society (JNBS) issued a statement offering transactional services to Jamaicans who have been displaced by the action of the UK bank.
JNBS did not name Barclays in its release on Tuesday, which was pitched mainly at pensioners, saying only that it would assist Jamaicans in the UK market whose accounts will be closed.
Barclays has pointed out that it is not the only bank with the new policy. While clients may open accounts at other UK banks, many providers have a similar country strategy in place in what is now described as "a fairly normal industry practice".
Barclays had telegraphed from the end of 2013 that it would be going this route under a new strategy laid out by its Wealth and Investment Management unit to focus on core markets and reduce the number of countries that the banking group operates in.
"As a global financial services provider, we evaluate the services we provide on a regular basis. In 2013, we announced that we are prioritising the need to reduce complexity and that the business will be focusing on a core set of 70 markets globally," said a spokesperson for the bank.
"As a result of this decision and in line with our strategy, Barclays has decided to close UK accounts for customers now resident in Jamaica. We are writing to affected customers and aim to provide as much assistance and support as possible during this transition."
Following the 2013 strategic review, Barclays opted to "refocus" on markets that are scalable and are aligned with its overall risk appetite. As such, it opted to refocus from 200 countries to a core market of 70.
The bank's actions are linked to the worldwide retreat in the correspondent banking market from businesses perceived to be exposed to money laundering.
But the retreat by foreign banks is now said to be hurting the Caribbean banks - the issue was ventilated at a growth forum in St Kitts last week - and the International Monetary Fund now appears willing to intercede.
JNBS, meanwhile, is moving to take up the slack through its UK operations, saying this week that it was willing to handle the transmission of funds for Jamaicans and other nationalities.
The JNBS group's remittance arm recently faced its own fallout after its Cayman bank opted to cut ties with money-services clients. However, JNBS was able to negotiate an agreement that allows its remittance operation to continue.
Paulette Simpson, senior manager, corporate affairs and public policy at Jamaica National's UK Representative Office, told the Financial Gleaner on Wednesday that many returning residents from the United Kingdom maintain a UK account to receive pensions and other payments; maintain funds in pound sterling, as the currency is strong and not affected by constant devaluation; access pound sterling if and when they visit the UK; and access pound sterling from Jamaica for transactions in the UK.
Jamaica National has services that can serve all those needs, she said.
"Retired persons living in Jamaica, who worked in the United Kingdom and are entitled to a private company pension, or a state pension from the UK government, for instance, can access the JN Pension Expediter Service. They may also access the service if they live in the United States or Canada."
Jamaica National already transfers almost 3,000 pension payments every month, which are credited directly to pensioners' accounts.
The building society noted that with the cancellation of UK bank accounts, affected account holders will need to make arrangements for pension transfers, direct debits and standing order arrangements.
"It is evident from the information that some former UK residents, who are now residing in Jamaica, particularly pensioners, will be impacted by this decision," Simpson said.
Barclays said Thursday that it recognises its customers may need more time to make alternative arrangements.
As such, the bank will offer a 30-day extension or more, where appropriate and based on client request, and has set up a specialist team to handle all calls to assist customers struggling to make other arrangements.
Barclays suggested that one option affected clients could choose was to open a local account in Jamaica.
Barclays itself previously operated a banking network in Jamaica for 52 years but pulled up stakes and moved out in 1977, after selling out to the Jamaican Government, which eventually renamed the operation as National Commercial Bank Jamaica.