Managing Director of Bank of The Bahamas International Paul McWeeney has called for amendments to banking laws to allow domestic banks to get intimately involved in other aspects of the financial services industry.
Mr. McWeeney, who was the guest on the Love 97 programme, “Jones and Company”, on Sunday, explained that currently, domestic banks are restricted in terms of what businesses they can engage in.
“For example, commercial banks cannot get involved in insurance,” he pointed out.
“I fully support the liberalization of these regulations to allow commercial banks to expand into other financial services areas that we have been prohibited from getting involved in.
“That’s what I see happening within the next five to 10 years. There will be some relaxation given to those types of regulations that will permit us, let’s say, to get involved in the insurance industry and to get involved in other areas of finance that we have not been allowed to [aggressively] pursue.
“I would expect [the commercial banks] to become more and more involved in nontraditional banking services, such as stock market concerns, corporate management concerns, broadening their spectrum into trust activity and that’s what I expect to see happening in the domestic banking arena.”
Mr. McWeeney said he would like to see a domestic bank, for instance, as a major shareholder in an insurance company.
The show’s host, Wendall Jones, questioned whether this would create conflict.
Mr. McWeeney responded, “In major territories around the world it’s already allowed. For example, Trinidad just recently allowed [it]. I think also Jamaica allows it. It’s a natural progression of the financial services industry in developing countries.”
He indicated that this would retain more dollars in The Bahamas.
Recently, the Banker magazine, which is part of the Financial Times group, awarded the coveted Bracken Award for country Bank of the Year 2005 to Bank of The Bahamas International. Mr. McWeeney accepted the award on behalf of the bank during a gala event in London on September 6.
It was the first time a Bahamian bank was recognized. More than 500 financial institutions entered, hoping for a spot on the world’s best banks list published annually.
The Bank of The Bahamas International’s successful performance has been reflected in good overall growth, return to positive increase and double-digit return on equity. The bank is growing at a fast pace, planning to expand outside the country with assets that have gone from $173 million in 1999 to $400 million presently.
Mr. McWeeney explained that one of the reasons why his bank won the award was because it was able to influence change in the local community.
He explained that the Bank of The Bahamas has gotten the ball rolling in pushing the authorities to look at the need to change laws that do not now allow local banks to operate outside The Bahamas.
“You find that in the U.S. mainland and also in some of the developing Caribbean nations there has been an evolution taking place in the financial landscape of those countries,” Mr. McWeeney said.
He added, “We feel that given the globalization taking place, for a bank to be strong and to survive in this day and age we have to look beyond our borders. So therefore in our strategic planning we put that as one of our primary objectives in the short term. In order to achieve that, we have to then do some lobbying, influence regulatory change.”
In making application to the Central Bank, Mr. McWeeney said Bank of The Bahamas explains why such a move would be good for the country.
He said other business interests being pursued by his bank have the impact of rapidly changing this country’s financial landscape.
Mr. McWeeney said local banks would become more competitive and consumers would have better choices to make.
Asked what the Bracken Award means for Bank of The Bahamas, he said, “I think the real meaning is for the country itself. It demonstrates that a homegrown, indigenous institution that’s managed only by Bahamians has the capacity to compete effectively with international banks and that says a lot for an organization like ours.
“It means that the country has now been recognized as having banks that are considered the best of the best around the world.”
By: Stephen Gay, The Bahama Journal
