St Vincent and the Grenadines (SVG) is a nation made up of several tiny islands and cays, but we are not islands unto ourselves. Despite retaining much of our traditional way of life, we are also full participants in the Global Village and everything that comes with modern life. We therefore must communicate and trade with the outside world. We are connected through our seaports and airports and by way of information communication technologies. These allow us to quickly and safely move money, people and goods. With interconnectedness come opportunities and benefits, but also risks, costs, standards and regulations.
This week, Vincentians saw the outcome of separate prolonged high-level negotiations between local officials and two large international firms which will impact how we trade, travel and communicate. On Tuesday, we learned that CIBC FirstCaribbean International Bank, the last of the “international” banks in SVG had been sold to our very own indigenous Bank of St Vincent and the Grenadines (BOSVG), subject to regulatory approval and customary closing conditions. Once the acquisition goes through, it will mean that the BOSVG’s market share will increase from 52 per cent to 67 per cent in respect of loans and advances, making it by far the largest financial institution in St Vincent and the Grenadines. The following day, Wednesday, October 13, a flight of Virgin Atlantic Airways from London Heathrow touched down for the very first time at the Argyle International Airport, making SVG more accessible to trade and travel to and from the United Kingdom and Europe. Having Virgin fly to the AIA is an investment to help us fill our hotel rooms and get our produce and seafood to Europe.
Large international firms like Virgin and CIBC FirstCaribbean are for the most part interested only in the bottom line. They answer to shareholders who want to see profits and earn dividends. If businesses like these find that the money they are making does not adequately compensate for the risks, they usually do not stick around “for the public good” or “in the interest of the people” as may a Government owned company. This in no way means that Government owned companies should not be run prudently. Far from it! This is especially true in the case of financial institutions like the BOSVG which will have two-thirds the nation’s loan portfolio and 72 per cent of deposits once the acquisition is completed.
Holding this oversized portion of local banking business places tremendous responsibility for the nation’s financial stability at the feet of the management of the BOSVG. We are confident however, that the BOSVG is up to the task. Five months ago, when a local digital start-up got cut off by the bank, many people cried foul, accusing the bank of stomping on the “small man”. The bank was in fact acting in compliance with international regulations and protecting its reputation, its depositors and the country. Being a lowly indigenous bank, the pressures placed on it to meet international banking standards are tremendous and come at a huge cost. It is a cost they must bear because losing correspondent banking relations with international banks in business centres like London and New York would be disastrous for our economy and every Vincentian would feel the pain. The responsibility is even greater now.