The Tribune

TALKING as a labour unionist, which he is, but not as the statesman that he should be, Labour Minister Shane Gibson expressed disappointment that in the consolidation of its business, Scotiabank (Bahamas) is focusing on financial gain rather than on the lives of the 50 Bahamians to be laid off within the next six months.

Because of the changing business climate banks – Canadian banks in particular – are looking at the Caribbean with juandiced eyes. Because of rising unemployment, and worsening economies, the Canadian banks no longer find the Caribbean an attractive offshore location.

“We are disappointed,” Mr Gibson told The Tribune. “It shows you that they are not interested in doing favours in the community. They are interested in serving the bottom line.

“Now more than ever it seems to be more profit-driven than it has been in the past. Particularly when you look at all the years that they made hundreds of millions from hard-working Bahamians,” said Mr Gibson.

Mr Gibson has put himself in a ridiculous position in view of what one of his compatriots told Bahamas Telecommunications staff recently when they were being invited to accept separation packages. Of its 700 employees, the Bahamas Communications and Public Officers Union believes that BTC management has decided to relieve its payroll of between 150 and 250 Bahamians.

After more than two years of government jockeying to get one of its own men on BTC’s board, it now finds that it cannot do what Mr Gibson expects Scotia Bank to do. Even government cannot think of the lives of Bahamians who will now lose their jobs from BTC — remember, business is business.

BTC’s CEO Leon Williams, a government appointee, has defended BTC’s move and has classified the impending staff cuts as strictly business. Obviously, neither he nor the government can come to their aid.

“This is not about emotions or about politics,” said Mr Williams at the time. “This is simply business. No bank, (or) Atlantis, (or) Baha Mar, is going to run it any differently. So let’s not get emotional about this. This is a business that we’ve got to run. And if we fold up, the Bahamian people lose 51 cents out of every dollar that BTC makes.

“So when I hear people talk about the union I just want to put it into perspective. If this (were) your business what would you do? You would seek as much as possible to save as many jobs as possible, but you cannot save them all. It’s business. It’s not how I feel or how you feel,” said Mr Williams.

There’s your answer, Mr Gibson, from the mouth of a fellow Bahamian. Instead of destroying everything, you salvage what you can, and for the sake of the country move on. Your knee-jerk reaction to change the labour laws to make it harder for employers to make their workers redundant will only worsen the situation. Instead of maintaining a presence in the Bahamas, the banks will just fold up and leave, and many Bahamian business people, who are having the same thoughts, will also start to pull back. At least the Canadian banks that are now consolidating, are maintaining a presence in the Bahamas. In Jamaica, for example, the Royal Bank of Canada gave up, sold out, and left after a 100-year presence. We understand that the Royal is also winding down in the Caymans.

In November last year, David Pett, writing in Canada’s Financial Post noted that “trouble in the Caribbean is becoming a popular refrain on Bay Street (Toronto) these days: The Bank of Nova Scotia is the latest to suffer, announcing it will write down more than $100m in loans related to its hospitality portfolio in the region.”

Wrote Mr Pett: “They’re not running away from the Caribbean, but they’re certainly not expanding there,” said Craig Ellis, a portfolio manager at Bellwether Investment Management Inc. “For most of the banks, it’s now simply about trying to reduce their cost structures there.”

Canadian banks, said Mr Pett, have long been dominant players in the Caribbean with Royal Bank of Canada, CIBC and Scotiabank accounting for close to 60 per cent of bank assets in the region.

Although Minister Gibson said the government was content with the direction of our economy, it is obvious that Canadian bankers are not. It is now time for this government take of its blinkers, stop fooling the Bahamian people, and face reality.

Wrote Mr Pett: “Canadian banks have long been dominant players in the Caribbean, with Royal Bank of Canada, CIBC and Scotiabank accounting for close to 60 per cent of bank assets in the region.

“It was a lucrative place to do business in the early 2000s, but many countries, including islands such as Jamaica and Barbados have not fully recovered from the financial crisis, leaving economies there burdened by high unemployment and rising debt.

“Tourism in the region, in particular, has suffered in recent years, largely from the tepid recovery in the US, said Peter Routledge, analyst at National Bank Financial.

“The data from the US over the past six months is encouraging and as more and more people feel comfortable about their future, maybe they’ll take a break and go to the Caribbean and enjoy a couple of weeks off,” he said.

“But that hasn’t been happening enough lately and the tough economic environment has put pressure on all three Canadian banks with a presence in the region, starting with Royal Bank, which announced the sale of its Jamaican business in January of this year, after 100 years of doing business in the country.

“There remains slightly less than $1-billion in hospitality exposure in the Caribbean that could be written down further,” he said. “We suspect however, that the company would err on the side of conservatism in this instance.”

“In any event, investors may need to get used to further measures from the Canadian banks in the Caribbean, said Mr Ellis, as they each deal with slow economic growth in the region and other issues impacting banking in the region, including the curtailment of offshore tax haven activity in countries such as the Bahamas and Cayman Islands in recent years,” wrote Mr Pett.

“You have too many banks fighting for fewer dollars so you have to have some rationalisation,” he wrote.

The Bahamas lost its financial glamour as a tax haven when, under the pressure of the OECD, it was forced to loosen its strict bank secrecy laws and operate in a more open environment.

Trust business and financial services did not keep up with the changes, which eventually forced the banks to look for cheaper areas in which to operate.

One retired Bahamian legislator noted yesterday that the Bahamas did not have the many options to cater to the wealthy that Switzerland and Luxembourg had when pressured over their bank secrecy. Those countries turned to the protection of works of art and boat and aircraft registration, to name but a few avenues that they developed to their advantage.

“At the time we didn’t read the tea leaves better in order to respond to the market,” the Bahamian conceded.