Protection being given to regional credit unions

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Parent Category: Sept 2011

Category: Week ending Sept 03rd, 2011

Published on Friday, 02 September 2011 00:19

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Credit Unions in the sub-region have been encouraged to take advantage of a regional capitalization fund. President of the Caribbean Confederation of Credit Union (CCCU), Yvonne Harris said the regional body is mindful of the negative impact that the demise of British American Insurance Company (BAICO) and Clico International has had on the OECS credit union sector.

 Harris who was addressing the opening ceremony of the 9th annual OECS (Organisation of Eastern Caribbean States) Credit Union Summit last week Thursday called for urgent action to be taken by the credit unions to limit the impact caused by the capital impairment of some credit unions.

She said it is CCCU’s vision that the Capitalisation Fund of $100,000.00 that was launched at the 54th annual convention in Curacao last July will ultimately be matched by many donor organisations including credit unions, and will become a regional stabilisation fund for the OECS credit unions. That fund is to be used to assist credit unions that are in immediate danger of failing.

According to Harris, the proposed stabilisation fund should be used primarily “to ensure the safety and soundness of the movement, and thereafter for other big projects which the credit unions believe should be further funded by this capital fund”. The CCCU President stressed that a credit union, like any other organisation, has to embrace change, or become obsolete or irrelevant to its members. She said it is in the mutual self-interest of the regional movement to foster, develop, and engender cooperation amongst credit unions thereby ensuring the resilience of the entire movement.

Harris disclosed that the OECS credit union sector of 63 credit unions, and approximately 250 members accounts for approximately 15 percent of the regional credit union savings and assets. “Therefore, CCCU needs a resilient OECS credit union sector, and this sector is very important to CCCU’s constituency,” she said. During the 2009-2010 period, credit union membership in the OECS grew by six percent, and total assets by eight percent.

Harris said there is need to foster and nurture cooperation amongst credit unions to ensure that each one benefits from the positive synergies. Finance Minister Nazim Burke who also addressed the OECS Credit Union Summit spoke of the importance of financial regulations. Minister Burke said it is in everyone’s interest to have effective legislation and regulation in place since poor financial practices by a few credit unions could undermine confidence within the entire movement, and could have negative effects on the entire financial system.

The senior government minister assured credit union members from the sub-region that regional governments, through their respective regulatory agencies, are doing their part to create a supportive regulatory framework to ensure the longevity of the credit unions. He urged the regional credit unions to work closely with their regulators to ensure that the funds of their members are adequately protected, and the movement is kept on a sound footing. “Credit unions... must remain a safe and important part of our financial system in the OECS Countries,” he remarked.

Minister Burke announced that new regulatory authorities are being created for the financial sector in the OECS, even as the region struggles with the impact of the BAICO and Clico fall-out. “We cannot afford another such disaster, and steps are being taken throughout the region to strengthen the supervisory process and ensure that modern legislations are in place to facilitate effective supervision,” he said. However, the government minister acknowledged that the credit union sector is one part of the local financial industry that has stood up better than most to the battering which the financial sector has taken in recent times.

He added that while credit unions have not escaped unscathed from “the global storm” that has swept over the financial system, they have so far stood up well. “Despite the damage done by investment losses in other institutions, the (credit union) movement itself, taken as a whole, remains robust,” he said. Minister Burke told the participants that regional governments recognise the benefits of the credit union movement as an important and integral part of the financial sector, and of their economies as a whole.

He indicated that the region is also challenged by new demands from the international community in areas such as money laundering regulations, tax information exchange agreements, and financing terrorism. The local Finance Minister said all of these changes create a strong need for credit unions to foster greater cooperation among themselves, and to become more resilient to face the challenges that are being experienced. The primary objectives of the OECS Summit are to foster greater collaboration, to improve networking and sharing, and to expose the credit union family to information, training and opportunity.

The OECS Summit in Grenada comes on the eve of the October launch of the year 2012 as the “Year of Co-operatives” as declared by the United Nations. According to Chairman of the Eastern Caribbean Co-operative Credit Uinion, Aaron Moses, the “Year of Co-operatives” is intended to increase public awareness about the role and importance of co-operatives, to promote the formation and growth of co-operatives as a viable development model that can address the economic needs and social economic empowerment of the people, and to encourage governments to establish laws and regulations that are conducive to the growth of the co-operative movement.

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