Accountant hopes acquisition of CIBC FCIB by BOSVG leads to change in status quo

WITH AN asset base more than twice that of CIBC FirstCaribbean’s (CIBC FCIB) operations in St Vincent and the Grenadines, the concept of the Bank of St Vincent and the Grenadines’ (BOSVG) acquiring CIBC FCIB’s branch operations should not be looked at as an impossible target.

This is the view expressed by accountant Brian Glasgow who said he believes that it should come as a sense of relief that a regional consortium now has the opportunity to participate in the ownership of one of the premier banking institutions in the region.

“It is quite achievable and it is quite manageable and I am sure, in putting their thoughts together with their respective consultants, Bank of St Vincent and the other banks who are acquiring the operations of CIBC would have taken all of these matters into concern, that they are capable financially of acquiring the assets, of managing the assets and of managing the portfolio of CIBC in the target countries.”

Glasgow, who was speaking on the ‘Issues at Hand’ programme on WEFM on Sunday, shared his opinions on several concerns he had observed in conversations taking place via social media, both locally and regionally with regard to this development.

It was announced last Tuesday, October 12 that a consortium of banks in the Eastern Caribbean Currency Union (ECCU) had entered into a definitive agreement to acquire the branches and banking operations of CIBC First-Caribbean in Dominica, Grenada, St Kitts andNevis, and St Vincent and the Grenadines.

The four members of the Consortium are the National Bank of Dominica Limited; Grenada Co-operative Bank Limited; St. Kitts-Nevis-Anguilla National Bank Limited; and the Bank of St Vincent and the Grenadines (BOSVG), which is also the agent of the consortium.

Glasgow noted that some of the concerns he saw through conversations on the matter could be rounded into six categories: security, confidentiality, functionality, accessibility, cost and concentration of risk.

Tackling the issue of security first, the accountant said that the Eastern Caribbean Central Bank (ECCB), which is responsible for regulating banks in the region, has created an environment for persons to feel safe with banking institutions. “I think we need to recognise the significance of the role that the central bank plays in the stability of the economies of the Eastern Caribbean. In fact, I think if we had to single out one institution that played the most important role in economic, fiscal and financial security in the region, it would be the Eastern Caribbean Central Bank,” he said.

“The regulatory process is world class and I think it would be fair to suggest to any customer, any depositor, that because of the stringent regulations imposed by the Central Bank, the banking system in the Eastern Caribbean is as safe as the banking system anywhere else in the world.”

Confidentiality is also proving to be a widespread concern for customers since the news of the consortium’s intention to acquire CIBC First Caribbean’s banking operations in the ECCU.

Glasgow noted that most indigenous banks, including BOSVG, were at one time government owned and managed institutions.

As such, there is a perception that anything government owned and managed, in the context of finance and money, may not be subject to the same level of confidentiality that other institutions like CIBC First Caribbean would be.

The accountant, who recently retired as a partner with accounting firm KPMG said there is a lot of truth in that perception throughout the region, from an historical perspective.

“I think we have passed that stage or we are certainly in the process of passing that stage where there is an absence of confidentiality. However, I think there is a lot more that can be done to strengthen confidentiality,” he said on radio.

This, he suggested, can be done through the passage of legislation to protect personal and sensitive information, and from internal banking mechanisms by which persons who have access to confidential information are easily identified in the event of a breach of confidentiality.

Glasgow revealed that he does business at both CIBC First Caribbean and BOSVG.

And while the former has a seamless, regional online banking mechanism that offers ease of transfer between customers and in different currencies, he cannot say the same for the latter.

He noted that certainly “persons who conduct a lot of commercial transactions will be anxious to find out how the consortium is going to facilitate continuity with those types of transactions”.

The issue of accessibility, in its simplest form, comes down to the queues that can still be seen outside of banks, no matter the weather conditions.

Glasgow commented, saying that the world is progressing and the region needs to catch up.

“This is an opportunity for the consortium, led by BOSVG to recognise that the status quo cannot continue. There needs to be a process of customer education, but there also needs to be a process of improving the internal IT systems to facilitate accessibility to funds, accessibility to be able to conduct business,” he said.

On the matter of cost, the accountant referenced the interest spread, noting that interest collected on loans far exceed what customers receive on savings in the bank.

“And you find that in more developed countries, more first world countries in the banking system, that level of interest spread is a lot lower than it is in this part of the world. That is going to be a concern, particularly not only for institutions and commercial customers. It’s going to be a concern for every calibre of customer,” Glasgow said.

Reflecting on the last 15 years, the independent financial services provider noted that SVG had a number of banking institutions present including Barclays Bank, CIBC, RBTT, Bank of Nova Scotia and St Vincent Co-operative Bank.

He noted that both CIBC First Caribbean and RBTT are in the process of being owned by a consortium.

“And although the names of the banks making up the consortium are different, there is again a perception that those banks, those indigenous banks are part of a single grouping of indigenous banks, that are subject, because of their ownership structure, subject to ownership and direction by government institutions,” Glasgow said. “So there is, and there has been an expressed concern about the level of the percentage of banking business that is going to be controlled by the indigenous banks. That is something that obviously, the indigenous banks will have to manage, both in terms of perception and in terms of reality.”

The consortium’s agreement to acquire the operations of CIBC First Caribbean was executed on October 12, 2021 and is subject to regulatory approval and customary closing conditions.