Extortion by commercial banks – Part III

Tue Jul 22, 2014

by R T Luke V Browne

lukebrowne@yahoo.com

I learnt from Trinidad and Tobago’s Sunday Express newspaper of February 2, 2014 that RBC Financial (Caribbean) Ltd. (the parent company of RBTT) posted a whopping profit of US $96 million and total revenue growth of 10 per cent or US $411 million for the year ended October 31, 2012. I also learnt from the same page of the same newspaper that this highly profitable bank was implementing staff cuts presumably so that it would make even more profit though it may mean the aggravation of the unemployment problem in the 19 Caribbean countries and territories in which it operates.{{more}}

The policy of retrenchment and redundancies which was being given effect in Trinidad and Tobago earlier this year has made its way across the calm and tranquil waters of the Caribbean Sea all the way to St Vincent and the Grenadines using Bequia as its port of entry. About seven Vincentians are on the verge of losing their jobs as a result of RBTT’s decision to close its Bequia branch. The men and women who are about to be given their marching orders are hardworking members of our society who obviously sought job security in the wrong place. The bank has shown no great concern for the welfare of our people and the human dignity of employees and it therefore offends the constitution of this country which asserts that we are a nation founded on a belief in the supremacy of God and the freedom and dignity of man. There is no dignity in the way that Vincentian workers are being treated as disposable objects that could be easily discarded without compunction. There is absolutely no dignity in that.

The sudden closure of the branch triggered a great deal of inconvenience to customers who already suffer from a dearth of options. This total closure of the Bequia branch serves to complete a process which began last year with a downsizing and restructuring operation that saw the severance of ties between the company and a branch manager and the reassignment of roles for two other officers. Last year, there were also staff cuts right here on the mainland – three senior members of RBTT’s staff (the manager of commercial banking and two collections officers) were axed pursuant to the dismantling of collections agencies in the Eastern Caribbean. Now that there is no collections agency in the Eastern Caribbean, if someone defaults on a loan, he or she would receive a call from Trinidad and Tobago about it. Enforcement responsibilities reside outside of this state. Similarly, if someone applies for a minimum loan, his or her loan application would have to be sent for processing in Port-of-Spain.

On top of all this, the manager of customer service, the customer relations representative and a loans officer were sent packing and predictably the customer service performance of the bank suffered seriously. One client complained to me that since the staff cuts at RBTT began last year, bank statements are coming late. An anonymous client complained about some matters through an article that was published in the Searchlight and News newspapers about six weeks ago.

In less than one year, then, the bank has removed around 15 names from its payroll and there is more to come. The men and women who have managed to cling on to their jobs for the time being live in the constant fear that they would be next. Staff morale is extremely low on account of the wanton disregard for the aspirations of decent people to put food on their table, provide a good education for their children and even to enjoy some of the simple pleasures of life. In this age of human rights, RBTT workers are forced to labour in deplorable and inhumane conditions. Not even the occasional “feel-good” boat ride to the Grenadines can take their minds off their daily agony.

Assuming that about 20 members of RBTT’s staff lose their jobs by the time all is said and done with this downsizing cycle, and that the average salary of each affected staff member was $5,000.00, it would mean that $1.2 million worth of annual wages and salaries would be lost to our economy.

I wonder if all this restructuring is meant to make RBTT (SVG) appear attractive to a prospective buyer. Especially since RBC recently sold its Jamaica holdings to Sagicor Group (Jamaica) Financial Ltd. and announced that this move was “consistent with its strategy” of being a competitive leader in the markets in which it operates. RBTT is certainly not a market leader here. Is it therefore considering a similar sale of its Eastern Caribbean holdings?

RBTT’s approach may be contrasted with the approach of BOSVG which still has a branch in Bequia. The BOSVG obviously places some sort of premium on considerations other than profits and therefore deserves commendation in this context. Do you think that RBTT (or Scotiabank or CIBC First Caribbean for that matter) would be caught dead issuing economically disadvantaged student loans? Regrettably, the question of contributing to our broad national development is not high on the priority list of the foreign commercial banks. The Bank of St Vincent and the Grenadines has local and regional ownership and its profits are therefore not carted away to rich foreign nations but stay right here to further strengthen the local and regional economy.

It would bring little comfort to the public to know that it’s not just the RBTT employees that have been given a raw deal. The customers have also been collectively dealt a severe blow. Quite apart from the customer service fall-off is the fact that they have been hit where it hurts the most – in their pockets.

The drastic reduction of the RBTT workforce has been compounded by measures which place clients at a distinct financial disadvantage. Not the least of the adverse developments from a customer standpoint is the fact that the holders of non-personal savings accounts literally had the wind blown out of their sails. Earlier this year, RBTT changed with little or no notice all non-personal savings accounts (which had an interest rate of 3 percent by mandate of the ECCB) to current accounts which have interest rate of zero percent! These current accounts are also liable to service charges. A non-personal savings account is simply an account that is not in the name of an individual (e.g. church accounts, the accounts of non-profit corporations, and business savings accounts). A client with $1 million in such a non-personal savings account will lose $30,000 annually as a result of the change. Let’s say that a total of $100 million was held in non-personal savings accounts, it means that the churches, charities, companies and other similar organisations would be cheated out of annual revenues amounting to $3 million in one shot. There was a similar change by Scotiabank recently that would presumably cost us at least a further $3 million.

This is but one of several shots which have been fired at us and which has left us badly wounded in the financial sense. We have suffered the equivalent of a life-threatening injury to our financial interests while the perpetrators of this financial heist are looking to make off with the loot.

RBTT has an interest bearing chequing account which is called a multiplier account. The holders of these accounts were not let off the hook and must be still reeling from the financial jolt they received at the hands of their bankers when the carpet (or rather the financial cushion) was suddenly pulled from under their feet. It was like a bolt from the blue. As I understand it, the interest on these multiplier accounts typically ranged from 1.25% to 1.75% subject to some terms and conditions. These interest rates were abruptly reduced to the token level of 0.05 percent. That’s a 97% fall in interest rate which the account holders are expected to take lying down. This particular measure would cost the users of these accounts about $150,000.00 (if there was a total of about $10 million in multiplier accounts).

Up to now we have not factored in the damage done by the imposition of the withdrawal fees and monthly service charges which have effectively led to negative interest rates on savings accounts and from which the foreign commercial banks stand to earn a cool 7 or so million dollars.

These matters are aggravated by many other issues which could be the subject of another article. Suffice it to say here that these other issues imply a further $2 million financial drain on our economy. Personally, it pains my heart to see that Scotiabank has even imposed fees and charges on children’s accounts. We might as well begin discouraging thrift among our children.

In conclusion – RBTT, in the course of just one financial year, is closing a branch, retrenching staff, eliminating interest payments and implementing new fees and charges. The actions of this bank and the other foreign commercial banks in this country, in this year alone, and through a scheme of unjust enrichment, would cost us collectively something near $20 million annually (or $100 million in five years). That is a lot of money.

The way in which these banks have carried out their duty flies in the face of the legal concept of equity and our society’s sense of what is right and wrong. It strikes me as being unconscionable, immoral, unreasonable and unfair. Obviously, someone needs to protect us from the arbitrary actions of these “almighty” foreign financial institutions which stand ready to crush any form of dissent and trample upon us. Let it be known that we do not yearn for a Court of Chancery, as described by Charles Dickens, which “gives to monied might the means abundantly of wearying out the right.”

The only way to avert the dangers and snares of this world is by an eternal vigilance and by the courage and conviction to act when necessary. It might be necessary now. Twenty million dollars worth of annual losses of income to Vincentians and this small, poor developing country we call home is more than sufficient reason for protest. Enough is enough.