The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s finance spokesman yesterday warned that the Bahamian middle class was “under serious threat” from business downsizing and tax increases, as Scotiabank (Bahamas) became the latest institution to inform impacted staff of its outsourcing plans.

K P Turnquest, the FNM MP for east Grand Bahama, told Tribune Business that the “vibrant, strong” middle class that all countries needed for social stability - and which the Bahamas had worked so hard to build up - was being increasingly jeopardised by the loss of good-paying jobs in the financial services sector and other industries.

His comments came as Scotiabank (Bahamas) confirmed to Tribune Business that staff in the two units earmarked for consolidation into the institution’s Trinidad hub had been informed on Monday about how they would be impacted.

Suggestions that up to 90 jobs might be impacted were dismissed yesterday by a Scotiabank spokesperson, who said the figure was “nowhere near that”.

They explained that the commercial bank was not releasing any figures on how many staff might be affected because it was still going through the process of trying to save as many jobs as possible.

Emphasising that no lay-offs or forced redundancies had taken place yet, the spokesperson said Scotiabank (Bahamas) was currently focused on finding new posts for affected staff within the bank, plus providing them with training and development opportunities.

“They did have an update meeting yesterday,” the spokesperson said of Scotiabank (Bahamas) meeting with impacted staff members. “They’ve made significant progress.”

Tribune Business understands that the two Scotiabank (Bahamas) units earmarked for consolidation into its Caribbean South Shared Services hubs are the processing support centre and the centralised retail collections unit.

The bank is hoping to achieve the necessary headcount reduction via a combination of attrition (not replacing staff who leave); early retirement;’ and a Voluntary Separation Package that has been introduced.

In a brief statement issued to Tribune Business, Scotiabank (Bahamas) said would seek to “minimise the impact” of its outsourcing on Bahamian workers.

“The bank today spoke with affected employees to provide them with an update on the progress we have made on the transition of the bank’s shared services functions to enhance the efficiency and effectiveness of our operations,” the statement said.

“During the update, the bank presented the proposed new operational structures outlining those functions to be centralised into Scotiabank’s Caribbean South Shared Services Hubs.”

Mr Turnquest, meanwhile, said Scotiabank (Bahamas) plans were another example of how globalisation has “finally hit home” in the Bahamas.

The Canadian-owned bank is following its fellow commercial bank, CIBC FirstCaribbean International Bank (Bahamas), which will shed 66 jobs by October 2015. Most of those are following a similar path to Scotiabank (Bahamas), as it outsources an entire business unit to Jamaica.

Other financial sector jobs have been impacted at UBS (Bahamas), which is winding down its private banking unit (the maximum number of job losses have been pegged at just over 30), while Credit Suisse has shed around 10 staff as it consolidates its back office private banking and wealth management functions.

These job losses, coupled with redundancies in the tourism sector and other industries, all run counter to the Government’s statements that the economy is turning around, based on developments at the likes of Baha Mar and Albany.

Mr Turnquest said of Scotiabank’s plans: “It’s a further consolidation in the industry and more outsourcing. Globalisation has finally hit home in its finest. It’s not good news.”

Apart from the banking industry consolidation being an indictment of the Bahamas’ economic competitiveness, Mr Turnquest suggested it also had something to do with tax policies.

Apart from seeking the ‘double taxation’ treaty benefits other Caribbean nations had obtained with Canada, Mr Turnquest said the commercial banks may also have been influenced by the new and increased tax burden imposed upon them in the 2013-2014 Budget.

“When the Government foreshadowed the increase in bank fees, I warned that they could not expect the banks not to react, either through cost cutting or an increase in fees,” Mr Turnquest said. “It’s one of those situations that was not thought out.”

Analysing the implications of all these job losses, he told Tribune Business: “The middle class that we have tried to build in this country for so many years is under serious threat.

“Not just in the banking sector, but throughout the economy. The hotels are doing the same thing. All these things represent solid, middle class jobs, and when you add taxes on top of that, you’re going after the middle class.

“For any society to sustain itself, you need a vibrant, strong middle class. Those are the persons that pay most of the taxes. Unfortunately, the Bahamian people are taking it on the chin again. How much more of this can we survive? How much more can we take?”

The Canadian-owned banks are looking to cut costs, extract efficiencies and return to historical profit levels in an environment characterised by high levels of non-performing loans and net losses.