Rik Parkhill, CEO of CIBC FirstCaribbean International Bank, said his institution is committing “a considerable amount of money” in The Bahamas in the short term, noting that he sees “tremendous undeveloped tourism potential” in the jurisdiction and that FCIB is actively seeking to partner with the government on infrastructure and other projects. Parkhill spoke with Guardian Business on the sidelines of FCIB’s third infrastructure conference, held in Montego Bay, Jamaica last week. He talked about the outlook of the bank in The Bahamas.
“In terms of the trends in banking, technology and mobile applications are becoming a bigger and bigger factor, and we’re spending a considerable amount of money in The Bahamas in terms of upgrading our technology infrastructure, but also in terms of increasing services to customers.
“So over the next 16 months we’re going to add about 100 ATMs regionally, and a considerable number of them will be going to The Bahamas. Some will be dual currency machines, and the next generation of ATMs are becoming more intelligent with more functions as well.
“From a retail banking perspective in The Bahamas, I think we’re perhaps underrepresented in some areas of The Bahamas and we’re looking to expand our footprint, which I think is a little bit different than some of our competitors,” Parkhill said.
He noted that the bank consolidated its two branches in Freeport, Grand Bahama on March 31, 2014, and that the bank has no plans for any further consolidation.
“The way our retail banking setup looks, I don’t think you’re going to see any less branches over the short or medium term, but you’re going to see a far stronger sales and financial advisory focus.
“So we have so many different ways people can process transactions, and as a bank, we would prefer that they utilize some of our electronic and Internet-based tools. We still will have transaction processing within branches but the branches are going to look more like sales, credit counseling and financial advisory centers,” he said.
Parkhill also disclosed a new focus.
“We’re turning around loan approvals faster and faster to the point where by the end of this year – at least in terms of less complex transactions – the average will be about 48 hours,” he said. “We’re starting to turn around car loans within that period of time.
“Part of the restructuring we went through, yes it was designed to cut costs and increase productivity, but it was also designed to simplify our processes, particularly by reducing the number of layers and approval processes that you need to go through to process a typical transaction or deal with a customer issue,” he said.
Meanwhile, at the same conference, Marie Rodland-Allen, CIBC FirstCaribbean’s managing director for The Bahamas, spoke to what she saw as necessary for the banking industry in The Bahamas.
“Growth. I would just say growth. The IMF just reduced its growth projections for The Bahamas. We have to get growing. I mean, 15.7 percent unemployment is not a low number. We have to get people back to work.
“I think we would like to see us get to the point where we’re north of two percent growth,” she said.
P3 Potential
Parkhill told Guardian Business he saw “tremendous undeveloped tourism potential, particularly in the Family Islands.” He said this presented an opportunity on the infrastructure front.
“We’re happy to work with the government of The Bahamas – or any other sponsor – in terms of making sure that there’s appropriate infrastructure to accommodate any type of development on those islands. And we realize how costly it is to run The Bahamas as a country because it is so spread out geographically.”
He said the bank was actively pursuing public/private partnerships with the Bahamas government and others in the region. Those discussions center on what is financeable, what the appropriate structure to increase the probability of getting a project financed might be, and bringing the private sector partners to meet with government.
“We’re very open to working with governments on an advisory or financing basis – or both – and one of the issues that we have in The Bahamas is that we have a lot of excess liquidity at this point. I think among all the commercial banks, we tend to be the bank of choice for depositors and we would like to find incremental ways that we can deploy those deposits and earn a return, and infrastructure is so important from a competitive perspective as well as a quality of life perspective,” he said.
FATCA
Parkhill also assured that the bank is prepared for the implementation of the U.S. Foreign Account Tax Compliance Act (FATCA).
“We are. We’ve hit all of the milestones, and have an extensive project plan.
“The other thing that’s worth pointing out is that in terms of customers that are U.S. citizens, they account for a very small number of our customers. The vast majority – even in the wealth area – are Caribbean nationals.
“I think the days of someone opening a bank account in the Caribbean who doesn’t have specific ties to the region are over. So I suspect that customers that fit that profile – U.S. citizens to begin with are a small number of our total customers – and I suspect that most of the banks will adopt eventually the practice that we’ve adopted, and that is that you have to have a reason to be here to open a bank account,” Parkhill said.
While he declined to comment on whether FATCA is an overreach by the United States, Parkhill did speak to the changing overall regulatory atmosphere.
“It’s been a large project to make sure that we hit all of the milestones and are able to meet all of the requirements, but its an initiative, and there’s obviously a legitimate public policy concern from governments all over the world that they want to maximize tax revenue and minimize tax leakage.
“I don’t think it changes the way CIBC FirstCaribbean or its shareholders look at business in the Caribbean, because even in our wealth businesses we have relatively few non-Caribbean national customers and most of those people have been customers for a long time.
“So the segment of customers that don’t have specific ties to the region, they’re just not really a factor for us, and they haven’t been viewed for a long time as a growth factor,” he said.
Value-Added Tax (VAT)
Rodland-Allen acknowledged that VAT has had an effect on The Bahamas.
“I think it has. It’s an increased cost, and so in order to be compliant, we also had to do some work. But the banking industry is no different from any other industry who is affected by VAT. Very few people are unscathed by it.
“But actually it’s gone quite seamlessly, and I think that’s because government did grant an extension, and so we were able to get everything organize. So in terms of implementation and educating our customers, it’s been quite smooth,” she said.
Parkhill pointed out that the bank has dealt with VAT in other Caribbean jurisdictions.
“So this wasn’t exactly a new adaptation for us,” he said.
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