The St. Patrick’s Cooperative Credit Union (SPCCU) is positioning to break the current monopoly that Bank of Montserrat Ltd has in Montserrat.
This was revealed during the SPCCU’s 49th Annual General Meeting of Audited Statements for 2019 and 2020 held on Tuesday, June 14 at the Montserrat Cultural Centre.
The event, which was also streamed live, allowed members of the credit union to hear from leadership on its financial standings during the COVID-19 pandemic.
General Manager Peter Queeley told the meeting that “2020 was a different financial year”. He said credit union members took the approach that they weren’t borrowing and waiting to see what would transpire. “Members weren’t spending or travelling,” he added. “Towards the latter part (of 2020), quite a lot of members who noted the impending sale of Royal Bank of Canada to Bank of Montserrat moved their money from RBC to the credit union.”
This, the manager explained is the reason that at the end of 2020, the institution had more than seven million dollars in cash. The credit union used the cash infusion from the RBC accounts to increase its investment portfolio.
The official revealed that the credit union is currently in discussion with the Eastern Caribbean Central Bank (ECCB) and other regional credit unions about becoming part of the clearing system.
“Bank of Montserrat has refused us the opportunity to use them as a partner to issue chequing accounts to our members cleared upon our account at the BoM using co branded cheques. As a result we have successfully lobbied the ECCB to change the laws allowing credit unions to operate clearing accounts directly with the ECCB similar to banks.,” Queeley stated.
Montserrat aims to be the pilot for a new plan to allow credit unions to be able to clear cheques locally, make electronic fund transfers directly rather than going through the national bank.
In order to do this, SPCCU must have a security cash reserve or investments in the ECCB or a partner system. For banks this is 6%, Queeley explained. As they are still unsure of what the requirements will be for credit unions they aim to have 10% of their deposits invested with ECHMB Capital. This allocation currently stands at seven million dollars.
Once this has been approved, the SPCCU plans to move its operational account which is about five million dollars from BoM to the central bank.
“This is a deliberate strategy by us. Montserrat has amended one of the regulations in the Payments System Act to allow credit unions to clear their own cheques and issue payments directly,” Queeley told Discover Montserrat. “The ECCB has chosen to widen the opportunity to any credit union within the currency union that desires to do so, but Montserrat will pilot. With the proposed new arrangements with the ECCB we will be able to do regional payments and settlement independent of BoM.”
In total the SPCCU official said the plan is to start with approximately $12.0M with ECCB and related institutions. $7.0M in investment with the ECHMB Capital and $5.0M in an operational account with the ECCB. “We are pushing for all the legal and operational arrangements to be completed by September so we start the pilot of clearing directly with the ECCB for the last quarter of 2022. This will effectively break the monopoly that Bank of Montserrat has locally in terms of offering checking accounts to the public and making and settling regional payment transactions.
“Subsequently, we will tackle SWIFTS payments regionally and internationally which would bring the issue of correspondent banks to the fore. We have started to explore the issue of correspondent banking for regional credit unions with the Caribbean Confederation of Credit Unions, the World Council of Credit Unions and the Association of British Credit Unions. To this end all the parties will meet in Glasgow Scotland in July 2022 to advance the discussions,” Queeley stated.
Watch the St .Patrick’s Cooperative Credit Union 49th Annual General Meeting on – YouTube