The Eastern Caribbean Monetary Council is considering a proposed amalgamation of the region’s banks in order to create more efficiency and stability within the financial system.
There are currently over three dozen banks listed across the OECS region where individual countries hold responsibility for licensing banks in their respective territories.
It is a situation which is described by Governor of the Eastern Caribbean Central Bank Sir Dwight Venner as a “banking overload”.
Sir Venner says there exists a strong case for amalgamating banks across the Eastern Caribbean which has a population of just over half a million.
“Legally we have 40 banks in the OECS and that is to say that because each country licenses banks separately, the Bank of Nova Scotia for example, which has seven branches in the Eastern Caribbean Currency Union, is regarded as seven banks, so we end up with 26 foreign banks and 14 local banks. For a population of 600,000 based on all the arithmetic, these are too many banks.”
The Eastern Caribbean Monetary Council has examined the possibility of amalgamating banks across the Currency Union and there is consensus that steps must be taken to advance this initiative.
But the ECCB Governor advises that the amalgamation process must be undertaken carefully.
“Banks are not like supermarkets, if so they could be closed down with impunity. Banks hold the deposits of citizens and therefore must be treated differently. There is also the payment system where cheques are exchanged, not only within countries but between currencies, and any unraveling of that system could be chaotic so one must proceed in a very measured way and that is what is taking place.”
The ECCB governor warns that in order for the region’s banking system to remain profitable and viable several banks must join forces.