Firstly, as a Montserratian, and secondly as a Manager of an indigenous financial institution operating in Montserrat and the wider Eastern Caribbean Region, I welcome the move by the consortium of Eastern Caribbean Indigenous Banks to include the Bank of Montserrat to enter into an definitive agreement to purchase the operations of the Royal Bank of Canada in their respective territories and in the region.
I support the view that this transaction will present the indigenous financial institutions involved with additional size, scale and scope necessary to play a more active role in the development of our respective countries to include Montserrat.
As an economist and financial specialist operating from, and residing in Montserrat, I hold steadfast to the viewpoint that financial independence is the first step in the process towards self-determination. This transaction by the indigenous banks including the Bank of Montserrat to purchase the operations of a FOREIGN owed financial institution will definitely enable the respective LOCAL institutions play a greater development role their respective countries. This in my view is a step forward in the process of self-determination which is the highest level of empowerment.
It would however be remiss of me not to highlight that this transaction itself will create some levels of concentration, and in some cases a monopoly situation within the Montserrat financial system in particular. This is of particular concern to the other players in the financial system and should be of some concern to the general public.
For example, the transaction by the Bank of Montserrat to purchase the RBC operations in Montserrat will reduce the number of financial institutions doing “banking business” in Montserrat from four to three. However, and probably most importantly, it will reduce the number of commercial banks operating in Montserrat from two to one.
Whereas, there will continue to be three financial institutions in Montserrat doing some sort of “banking business” the reality is that the St Patrick’s Cooperative Credit Union Ltd (SPCCU) and the Montserrat Building Society (MBS) are not part of the ECCB clearing and settlement systems. This means that these institutions would now have to solely rely on the one commercial bank that will now be operating in Montserrat for certain services which presents an interest dynamic in terms of choice and competition.
The elimination of the RBC from the Montserrat financial landscape will render the Bank of Montserrat a monopoly in terms of the following banking services for example:
1. Settlements / Clearings
2. Checking Accounts
3. Wire transfers
5. Bulk Cash Purchase
However these concerns are not insurmountable and if properly and carefully managed by the relevant regulatory authorities and the Government of Montserrat, these challenges can be overcome.
Peter D. A. Queeley
St Patrick’s Cooperative Credit Union Ltd