Bank will not pass asset tax rise charges on to customers
At least one commercial bank is promising to spare its customers increased fees following the rise in the bank asset tax.
CIBC First Caribbean International Bank said for the time being it would find other ways to recoup its losses.
During last week’s presentation of the 201 Financial Statement and Budgetary Proposals, Minister of Finance Chris Sinckler announced that the tax would rise immediately from 0.2 per cent to 0.35 percent, prompting fears of increased bank charges.
However, Managing Director for Retail and Business Banking at CIBC First Caribbean Mark St Hill said while his financial institution expected a hit from the levy, it would exhaust all avenues to recover the additional costs without affecting customers.
“One of the challenges is we have a lot of capital to deploy and we have excess liquidity and therefore if the market is not taken up in terms of loans where we make our profits, that is the challenge . . . But like all private enterprises, we need to find ways of maintaining or to recouping this additional expense,” St Hill said during the launch of a Visa Debit Business Card at the bank’s Warrens, St Michael headquarters.
During last Tuesday’s budget speech, Sinckler rapped the commercial banks for not delivering more benefits to customers after the Central Bank of Barbados liberalized the minimum saving rates last April.
It was for this reason, he said, that he was increasing the bank asset tax.
However, St Hill rejected this claim, stating that there was enough evidence in the market to show that banks had been offering their customers a range of products at improved rates, even though market pressures continued to dictate those rates.
“The banks are very aggressive in rates. Even in the market today there are loan and mortgage rates [that] continuously have fallen, and this is not even a reaction in reduction to MSR [Minimum Savings Rate],” he said.
“I returned to the island since 2004 and if you do your studies you will see that loan rates have dropped year on year. So it has been driven not only by reductions in MSR, but the fact that banks are trying to find ways to deploy their capital and that the competitive pressures between the banks have reduced rates significantly. I challenge anyone to do the research,” St. Hill said.