The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A senior commercial banking executive yesterday warned of more lay-offs, and potential closures, in the industry as a result of the increased competition that will likely be provided by legalised web shops.

Gregory Bethel, Fidelity Bank (Bahamas) president, speaking as a panellist at the Bahamas Institute of Chartered Accountants (BICA) seminar, said it was his belief that web shops would ultimately seize lending business from commercial banking institutions.

“What I expect is that as the onshore gaming industry matures, there will be a transfer of wealth from gaming customers to the gaming industry entrepreneurs,” Mr Bethel said.

“I think that will be a positive thing because they will have these profits, and I expect them to utilise those funds for lending and investments. The entrepreneurs in the gaming industry will provide a source of funding that will increase competition for financial institutions, and that will lower borrowing costs for the Bahamian public and entrepreneurs in business. I also see them participating in the capital markets.”

Mr Bethel added: “I think that because the gaming houses will be in communities where there are no banks, they will offer substantial online banking and ATM services to customers, and I think their fees will be less.

“The bureaucracy and red tape will be less, and that has to be good for the consumers. I expect that you will see more branches closing from the financial institutions abroad, and more reductions in staff, but the pendulum would just swing where business would be picked up by the local financial institutions.”

Philip Galanis, managing partner of HLB Galanis, said: “I hope that some of them will become competitors of commercial banks in this country, because they are in a very real way engaged in commercial banking.

“The more domestic commercial banks we have that offer good services, and are regulated by Central Bank, I think that the better it is for the consumer. We hear of the horror stories about opening accounts, banks charges, loan applications and so on.”

Attorney Wayne Munroe, who represents several web shop operators and was also a panellist, said many would enter the tender process to obtain licenses because of the strict requirements.

“My information is that many of them will not move forward because they will not be able to come up with $3 million, $4 million in a banking instrument in the timeframe that the Government expects to receive it,” said Mr Munroe.

He added that many of his clients were considering whether to close down their operations in the Family Islands.

“Right now, many of my clients are weighing whether or not they can continue services on the Family Island. The fees will be about $32,000 per store, and you have to pay fees for everyone to be vetted and, on the smaller island, you have to consider whether that makes sense,” said Mr Munroe.