One of the T&T's most se­nior bank ex­ec­u­tives has ex­pressed con­cern that the lack of a func­tion­ing board of the lo­cal Se­cu­ri­ties and Ex­change Com­mis­sion (SEC) is be­gin­ning to im­pact on lo­cal bank­ing ac­tiv­i­ty. The con­cern was ex­pressed by Richard Young, man­ag­ing di­rec­tor of Sco­tia­bank T&T Ltd. Young said the ab­sence of a func­tion­ing board at the SEC has been hin­der­ing the growth and ex­pan­sion of banks."The Gov­ern­ment must work hard­er at im­ple­ment­ing the boards, par­tic­u­lar­ly in our sec­tor. All you have is chair­man, but the com­mis­sion­er's ap­point­ment have ex­pired."

He lament­ed that "new prod­ucts have to be reg­is­tered, peo­ple want to get li­censed and the big cap­i­tal deals have to be vet­ted and ap­proved by the SEC, but they can­not do it." He ex­plained that "the staff is there and do­ing their part, but there is a stage in the process where it re­quires the com­mis­sion­er to sign off and there is no com­mis­sion­er." With re­gards to Sco­tia­bank, Young said, "I want to get two peo­ple down from Toron­to to deal with some of our clients who re­quired to be li­censed...I al­so have a cou­ple of large cap­i­tal mar­ket deals that I am work­ing on, and it would come to a point where I would need the SEC to ap­prove it, and, if there are no com­mis­sion­ers, that is go­ing to hold it back."

Young said an­oth­er or­gan­i­sa­tion that was im­pact­ing on the fi­nan­cial sec­tor was the Na­tion­al In­sur­ance Board. He said there was no chair­man or board to make de­ci­sions or grant ap­provals. It is ma­jor cap­i­tal play­er, but every­thing is stale­mat­ed, he said. Young al­so ex­pressed con­cern over the ab­sence of a WASA board. "The Gov­ern­ment has to get go­ing with the im­ple­men­ta­tion of these boards," he said.

No one is bor­row­ing

De­spite the ef­forts by the Cen­tral Bank Gov­er­nor to re­duce the in­ter­est rates to en­cour­age con­sumers to take loans, Young said it is still not work­ing. Call­ing it a clas­si­cal move, Young said even if the in­ter­est rates on loans are low­ered, if peo­ple are not com­fort­able and con­fi­dent, then they are not go­ing to com­mit to debt. He said there were so many fac­tors cre­at­ing this un­cer­tain­ty which were im­pact­ed by the econ­o­my, in­clud­ing job se­cu­ri­ty and stag­nant busi­ness ac­tiv­i­ty.

The ques­tion is: would peo­ple still bor­row?

"In the case of the busi­ness­men, would they still bor­row and ex­pand if there is no mar­ket or es­tab­lish a new project if the de­mand was not there?" Young asked. He said the big­ger busi­ness­es may have the ca­pac­i­ty to sur­vive and com­pete, so the pie be­comes small­er as peo­ple have be­come more ag­gres­sive. "Eat lit­tle and live long has now be­come the pop­u­la­tion's ap­proach to life," he said.

De­posits grow­ing, loans flat

"As a re­sult, my de­posit book has grown from eight to 10 per cent with­in the last year. But my loans have not grown. It is vir­tu­al­ly flat." He said peo­ple are com­plain­ing that the banks were not lend­ing, but that was un­true. Young said when the bank takes in de­posits, it was cost­ing him mon­ey be­cause the bank has to pay de­posit in­sur­ance, ser­vice pay in­ter­est to the de­pos­i­tor and al­though the in­ter­est rate is not high, the bank can­not do any­thing with the mon­ey. He said he's chal­leng­ing any busi­ness­man who had good idea of a project that was bank­able to ap­proach the bank. "If I could lend it, I would lend it, but I have a re­spon­si­bil­i­ty, both to the share­hold­ers and de­pos­i­tors, to be re­spon­si­ble. "There­fore, com­ing out of a tight pe­ri­od, it re­quired you to be con­ser­v­a­tive as Sco­tia has al­ways been, which, time has shown, be­ing con­ser­v­a­tive made sense."

Wise in­vest­ments

Un­for­tu­nate­ly, Young not­ed that in­vest­ment op­por­tu­ni­ties were lim­it­ed. That's the rea­son Young said Sco­tia­bank es­tab­lished the Sco­tia­bank DBG Caribbean In­come Fund to pro­vide the pop­u­la­tion with an al­ter­na­tive. Af­ter as­sess­ing the econ­o­my, he said this fund–a US dol­lar-de­nom­i­nat­ed in­vest­ment–caters for peo­ple who re­al­ly have US dol­lars/US dol­lar port­fo­lio and want to di­ver­si­fy their in­vest­ment port­fo­lio. Young said it was al­so a re­gion­al fund, which meant in­vest­ing in re­gion­al se­cu­ri­ties, gov­ern­ment and cor­po­rate. It pro­vides an op­por­tu­ni­ty to in­vest clos­er to home, in­clud­ing coun­tries like T&T, Ba­hamas, Bar­ba­dos and Ja­maica, he said. Asked if Sco­tia­bank had plans for a TT dol­lar fund, he said the bank was work­ing on it, bear­ing in mind that even if they had a TT dol­lar fund, it would be chal­leng­ing to find in­stru­ments to in­vest in and get a re­turn to pay in­vestors.

Op­ti­mism

Notwith­stand­ing the chal­lenges, Young said he is a bit op­ti­mistic since Fi­nance Min­is­ter Win­ston Dook­er­an stat­ed re­cent­ly he was putting mea­sures in place to get the econ­o­my mov­ing. One such move, Dook­er­an said, was the pay­ment of mon­ey to con­trac­tors and the com­ple­tion of out­stand­ing projects. Young's big­ger con­cern, though, is mo­bil­is­ing the con­struc­tion sec­tor in time for the dry sea­son, which was on­ly six weeks away. He said it was im­por­tant for the con­struc­tion sec­tor to feel com­fort­able, which means that con­tracts for projects have to be award­ed soon. Young said that up to two weeks ago, he was con­cerned about how the econ­o­my was not mov­ing, but since Dook­er­an gave his com­mit­ment about stim­u­lat­ing the econ­o­my, he has been feel­ing more pos­i­tive.