Central Bank of The Bahamas (CBOB) Governor Wendy Craigg yesterday welcomed the transition of the regulatory and supervision responsibilities for the country's credit unions from the Department of Co-operative Development to the Central Bank as a crucial step in further promoting the sector's impressive growth. Speaking at a press conference launching the partnership, Craigg said that CBOB's oversight of the credit unions would have no impact on or control over the unions' rates but would instead instill confidence in credit union members that the sector is being governed responsibly.
"We will be issuing some guidelines to the credit unions with respect to their operations but we won't control the rates. They will determine the rates at which they will lend and the rates that they will pay on their deposits. As far as the Central Bank is concerned, we want to ensure that they are operating according to international best practices," Craigg said.
The governor said that there was no denying the importance of credit unions in today's economic environment, with collective assets of nearly $350 million by the end of 2014, which represents an "enviable" seven percent annual growth rate over the past five years. Additionally, credit union membership approached 40,000 members, or roughly 20 percent of the country's labor force.
"We're certainly pleased to have achieved this milestone. We believe that it will benefit the credit unions and we look forward to working with all parties in a manner that promotes the sector's future growth," she said.
The move is not unique to The Bahamas, with countries including Jamaica, Suriname, Belize, and Barbados undertaking similar efforts to bring their credit unions under a single regulator. Local interest in transferring regulatory responsibility grew in recent years as Bahamian credit unions experienced tremendous growth.
"Over the past three years we have worked very diligently to ensure that the new regulatory framework that we have in place today would offer the appropriate flexibility and robustness to underpin the future growth of the sector. At the same time we wanted to ensure that it fostered public confidence in these very important financial activities," said Craigg.
The move was motivated by three main factors, according to Craigg: the growing size of the sector, which necessitated an expanded oversight regime; the World Council of Credit Unions' (WCOCU) suggestion that the sector should be regulated by the Central Bank; and the desire for greater consolidation within the domestic financial regulatory space.
"With credit unions coming under the ambit of the Central Bank they are now able to leverage the bank's resources, expertise, and financial supervision that has been accumulated over the years in our regulation and supervision of the banking sector," Craigg said.
Sonia Cox-Hamilton, President of the Bahamas Co-Operative League Limited, applauded the work of the Department of Co-operative Development, within the Ministry of Agriculture, Marine Resources, and Local Government, in regulating the country's credit unions with a "strong arm."
"This $350 million we really want to say that it is Bahamian money. It is here, it will stay here, and the bosses are here. All Bahamian money [and] that is something to be very proud of," said Cox-Hamilton.
Cox-Hamilton said that co-op members could expect the same level of services following the move, with deposit insurance from CBOB serving as the most substantial change to services for members with more sizable contributions.
"In terms of any vast difference [of services, no. We will just be reporting to another regulator. We have always had inspections depending on how the regulator saw the credit union going," the governor said.
Craigg noted that the CBOB held its first industry briefing for the sector to introduce the credit unions' teams to the CBOB's supervisory team on Monday.
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