BASSETERRE, St. Kitts – THE dust from the Royal Bank of Canada (RBC) issue is settling and, while some questions are still left in the air, a local economist has shed some light on the situation.
The economist, who spoke with SKNVibes on condition of anonymity, said he took note of the uproar and followed the situation as it panned out a number of weeks ago, concluding that, with all the calls being made for various groups, entities or organisations to intervene, there is very little that could have been done.
In order to put things in perspective, it must be noted that a couple of weeks ago a number of individuals who had visited the RBC indicated that they were told that as of May 23, 2016 a $25 fee – plus VAT – would be applied to specific savings accounts.
This news was met by lengthy queues of individuals who reportedly went to the RBC to withdraw their monies.
Calls were made for both the Eastern Caribbean Central Bank (ECCB) or the Eastern Caribbean Currency Union (ECCU) and the Government of St. Christopher and Nevis to intervene in the matter and somehow protect customers from the perceived injustice.
The economist explained that the range/scope/power of the Government and the ECCB/ECCU to intervene is limited.
He described the role of the ECCB as primarily to ensure the strength of the Eastern Caribbean currency, determining the maximum rates that banks could offer to their customers for their deposits and controlling inflation in the region through its monetary policy. As for the fees banks charge their customers, the ECCB has no say whatsoever.
It was the expressed expectation of a number of individuals that the Government should and could intervene but the economist said even if the Government had the responsibility to do that, it has no power to control the banks’ fees structure. He said it has the power of moral suasion but even in those situations banks are free to follow through with their planned price increases or implementation.
He did however suggest that the Government could legislate that banks be mandated to give clear disclosure of their fees.
He concluded that it is unlikely that the implemented charge would be rescinded and that customers would, as several have, make a decision to change banking institutions or live with the charge.
That decision however, the economist noted, could be influenced by the following factors:
1. Over the years it has gotten more expensive to do business;
2. What fees are being charged at the other banks;
3. All banks are facing similar challenges as it relates to profitability;
4. Currently, the banks have no obligation to individually notify its customers of fees; and
5. This move made by the RBC could be made across the board at other banks.
