By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Bahamian credit unions in have experienced an “enviable” 7 per cent growth rate over the past five years, the Central Bank’s governor said yesterday, an expansion rate that has likely outstripped their banking counterparts.

Wendy Craigg said the regulator will now be issuing guidelines to credit unions on their operations, now that they are under Central Bank supervision.

“If you look at the credit unions, there is no denying that they play a very significant role in the Bahamian economy,” she said.

“Over the years, the credit unions have achieved tremendous growth in their collective assets, which aggregated nearly $350 million at the end of 2014. This is certainly an enviable average annual growth rate of about 7 per cent over the past five years.

“:Their membership continues to grow and was approaching some 40,000 at the end of 2014. This represents some 20 per cent of the labour force. These achievements certainly owe much to the guidance that has been given by the Department to cooperatives over the years,” added Mrs Craigg in a nod to the previous regulator.

“The sector as a whole is about three quarters [the size] of our second smallest institution in the domestic market, so this is really a significant when you look at the assets.”

The Central Bank assumed supervisory responsibilities for all credit unions in the Bahamas from June 1.

Mrs Craigg said the move to place credit unions under the regulatory ambit of the Central Bank was motivated by three factors.

“First, it recognises the growing size and complexity of the sector, and the need to ensure that it has an oversight that is commensurate with this profile,” she explained.

“Secondly, the transition aligns with the widely held view by various agencies, including the governing body for credit unions, the World Council for Credit Unions, that the sector should be regulated and supervised by the entity responsible for financial stability and, for us, that is the Central Bank.

“The move also achieves the desire of the authorities to have more consolidation within the domestic financial regulatory space. With credit unions coming under the ambit of the Central Bank, they are now able to able to leverage the bank’s resources and expertise in financial supervision that has been accumulated over the years through our regulation and supervision of the banking sector.”

Sonia Cox-Hamilton, president of the Bahamas Co-operative League (BCLL), said members of Bahamian credit unions would continue to enjoy the same service they have come to expect.

“We will keep banking hours like every other bank. They could expect that their monies would be even more protected because the Central Bank would provide to us a deposit insurance, which is the only really big change, and that insurance is for anyone with sums of $50,000 or more,” she added.

Mrs Cox-Hamilton said credit unions have always adhered to strict regulatory guidelines. “We have always had inspections. Some credit unions had inspections annually, and some credit unions had inspections twice a year,” she said.

“We were really regulated very strongly. We have to, of course, set aside monies; we have always had to do that. We have put aside liquidity reserves, statutory reserves, a stabilisation fund; all of these things have been done and will continue to be done.”

Mrs Craigg said the Central Bank will be issuing guidelines to credit unions with respect to their operations. “We don’t control the rates. They determine rates at which they will lend,” she added.

“We want to ensure that they’re operating according to international best practices, that the prudential norms are being adhered to and that the public can rest assured that the operations are being governed appropriately and they can have confidence in the system.

“All domestic entities that have been engaged in lending activities over the past five to six years have been experiencing higher levels of arrears. It has been no different with the credit unions. Their members are a part of the Bahamian public who have also been impacted. If they have lost their jobs, their ability to meet their payment had also been compromised. This is an area that the Central Bank has been monitoring very closely.”

Mrs Craigg added that she did not see web shops falling under the Central Bank’s supervision. “All entities that are out there providing financial services in terms of lending monies, they’re all supposed to be regulated,” she said.

“If they’re not regulated by the Central Bank, they come under the Financial Services and Corporate Providers Act. The inspector of financial and corporate service providers would provide that level of oversight to those entities.”