The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The continued outsourcing of financial services jobs is placing the Bahamian middle class “on a very unstable footing”, the Opposition’s labour spokesman saying yesterday: “I don’t know how we’re going to arrest this.”

Loretta Butler-Turner, the Long Island MP, told Tribune Business that the increasing tendency of Canadian-owned commercial banks to outsource back office functions to other Caribbean nations provided further evidence that the Bahamas has “lost its cutting edge” in financial services.

She was speaking after Royal Bank of Canada (RBC) this week confirmed plans to close its Nassau-based Credit Card Centre and transfer its processes to Trinidad & Tobago, a move that multiple banking industry sources said could potentially jeopardise 50 jobs.

Royal Bank has not provided any figures for the number of staff impacted, but Mrs Butler-Turner said the move would only “exacerbate” outsourcing/downsizing trends that continue to cost the Bahamas well-paying, solid jobs.

Pointing out that this threatens to undermine the Bahamian middle class, the bedrock of any society, Mrs Butler-Turner also slammed the Christie administration’s silence on the issue and seeming absence of any strategy to combat it.

“It’s a very clear indication that our financial services industry is contracting at a very rapid rate,” the FNM MP told Tribune Business yesterday.

“The saddest thing about all of this is that it’s the industry, and workers in financial services, that make up the largest portion of the middle class.

“When we see those jobs contracting and Bahamians being sent home, that means a whole portion of our economy - the middle class - the stable part of our economy, is on very unstable footing. It’s sad.”

Mrs Butler-Turner said Royal Bank’s latest consolidation move was taking place against an economic backdrop where the unemployment figures were “higher than ever”, and the Bahamian economy “cannot even keep pace” with the 3,000-5,000 high school graduates that swell the labour force every summer.

“It’s a very sad scenario,” she added. “In the case of the banks, it seems we’ve lost our cutting edge in financial services and never recovered. It’s exacerbated now. Every day we’re losing good paying jobs.”

Royal Bank’s latest consolidation/downsizing move represents another step in efforts to cut costs and align expenses with reduced profits stemming from the commercial banking sector’s non-performing loan (NPL) crisis.

With $1 out of every $5 lent by the sector at least one month past due, all three Canadian-owned banks - Scotiabank and CIBC FirstCaribbean, as well as Royal Bank - have sought to cut costs via a combination of branch closures and outsourcing of jobs/back office functions to lower cost jurisdictions such as Jamaica and Trinidad and Tobago.

While Scotiabank and CIBC FirstCaribbean have both previously told Tribune Business that their consolidation in the Bahamas has finished for the time being, it appears that Royal Bank is still seeking more efficiencies.

Royal Bank, in a statement issued this week, confirmed that the Nassau credit card unit’s inbound call centre operations will be transferred to Trinidad and Tobago on April 1. Its transaction processing functions will be switched to the same island on June 1.

Nathaniel Beneby, Royal Bank’s managing director for the Bahamas, Cayman Islands and Turks & Caicos, said: “Cards operations is part of a global business, and we continue to seek opportunities to leverage economies of skill, scale and scope.

“This alignment leverages enterprise expertise and technology to maintain our competitiveness and commitment to help clients thrive and communities prosper.

“We believe the consolidation of the O&SD Credit Card Centre in the Bahamas to the Trinidad & Tobago card operations and the Caribbean Contact Centre will position us to provide more convenient and better service to our clients, and create greater efficiencies within our operations.”

Mrs Butler-Turner, though, said the wider Bahamian economy would feel the knock-on impact from Royal Bank’s move, as businesses would no longer benefit from the spending power and disposable income of the impacted employees.

“The people we have working in financial services, they’re the ones that truly keep the economy afloat,” she told Tribune Business.

“It’s not going to be easy for us, and the Bahamian government has said not one word about the contraction in financial services, which is the second pillar of our economy.”

Royal Bank is in good company when it comes to downsizing Bahamian operations.

Scotiabank last year unveiled a restructuring in which around 50 staff were expected to lose their jobs, with six branch closures and the downsizing of two others.

CIBC, too, terminated 66 jobs in the Bahamas by October 2015, with 56 of those posts lost in the outsourcing of its operations group to Jamaica.

All three Canadian-owned banks are seeking to reduce costs by transferring back office operations to lower-cost jurisdictions than the Bahamas, with the consolidation also designed to maximise efficiencies.

Mrs Butler-Turner, though, suggested that there were likely more factors than cost involved in these decisions, when asked whether the Bahamas should be concerned about its economic competitiveness.

She added that crime and the ‘ease of doing business’, two areas where the Bahamas is not faring well, were likely to have played a part.

The Long Island MP also suggested that the Bahamas had failed “to keep up on the cutting edge” of international financial services once ‘bank secrecy’ laws became a thing of the past in early 2000.

Suggesting that the Bahamas had failed to develop new products and services, or market them effectively, to attract high net worth individuals, Mrs Butler-Turner said this nation was contracting while the likes of the Cay man Islands were growing.

Expressing concern that the Bahamas would be left with “shells”, she added that Scotiabank’s decision to downsize its presence on Long Island had negatively affected businesses and residents in her constituency.

“The Canadians must have made a decision that this is not a jurisdiction in keeping with their business plans, and a lot of their services are being moved out,” Mrs Butler-Turner told Tribune Business.

“This goes right to the bottom line of the middle class and unemployment in our country. I don’t know how we’re going to arrest this.”