Credit Union Boss Says Sale of RBC Could Increase Cost of Doing Business on Montserrat
Peter D. A. Queeley, General Manager of the St Patrick’s Cooperative Credit Union Ltd said while he welcomed the formation of a consortium of Eastern Caribbean indigenous banks to purchase the operations of the Royal Bank of Canada, he is concerned that the local purchase will leave consumers with no competition and possibly increase the cost of doing business here.
On Thursday, Bank of Montserrat chairman Dalston Lee confirmed that his bank along with four others had formed a consortium to facilitate the purchase of the local branches of the RBC in their jurisdictions. The five financial entities participating in the sale are: 1st National Bank St. Lucia Limited, Antigua Commercial Bank Ltd., National Bank of Dominica Ltd., The Bank of Nevis Ltd., and the Bank of Montserrat Limited.
Lee said “we are proud and pleased that we as a group of small islands came together to pursue this momentous deal for the benefit of all of our stakeholders. We see this as a significant milestone in the life of our bank as we continue to grow in a way that will allow us to better serve our customers. There are no plans for any immediate changes to the operation of the business/branches that we are acquiring. In addition, where possible, we will adopt best practices of RBC to ensure we maintain the very high quality service levels that RBC customers have come to expect”.
Queeley, who runs the only credit union on island, said the purchase of a foreign-owned financial institution will definitely enable the respective local institutions to play a greater development role in their countries. However, the transaction “will create some levels of concentration and in some cases a monopoly situation within the Montserrat financial system in particular. This is of particular concern to the other players in the financial system and should be of some concern to the general public.”
The credit union head said the purchase of the local RBC “will reduce the number of financial institutions doing “banking business” in Montserrat from four to three. However and probably most importantly, it will reduce the number of commercial banks operating in Montserrat from two to one.
“Whereas, there will continue to be three financial institutions in Montserrat doing some sort of “banking business” the reality is that the St Patrick’s Cooperative Credit Union Ltd (SPCCU) and the Montserrat Building Society (MBS) are not part of the ECCB clearing and settlement systems. This means that these institutions would now have to solely rely on the one commercial bank that will now be operating in Montserrat for certain services which presents an interesting dynamic in terms of choice and competition.”
Removing RBC as a competitor now means that BOM will have the monopoly on settlements and clearing of checks, checking accounts, wire transfers. purchasing of drafts and bulk cash.
Queeley added that the issues were not insurmountable and if “properly and carefully managed by the relevant regulatory authorities and the Government of Montserrat these challenges can be overcome.”
The sale of the banks are subject to regulatory approval by the Eastern Caribbean Central Bank and other customary closing conditions, and is expected to be finalized in the coming months.