Banking, Investment and Financial Services 2020
October 6th, 2020
Article by: Kay Baldeosingh-Arjune
“Liquid assets and capital buffers remained high, so banks were well placed to respond to liquidity shocks,” while capital adequacy “continued to be healthy and far in excess of the minimum statutory requirement,” the Report said.
It cautioned, however, that “with the shock to household and business income due to COVID-19 containment measures, the quality of loan portfolios may be at risk.”
According to the Bankers Association of Trinidad and Tobago (BATT): “Well-capitalised banks which provide substantial buffers to allow banks to withstand the potential credit risk losses derived from the pandemic,” is one of the strengths of the local banking sector highlighted by the COVID-19 crisis.
Other ways that the banking sector shone, BATT said, included:
- Care for staff and their families – with member banks prioritising customer and employee health and well-being while meeting client needs in new and innovative ways.
- Regular contact with customers to understand their situation and needs so we could expand our value offering and deliver much-needed services while exiting COVID-19 on surer footing.
- Financial support initiatives to customers – “Our banks have taken extraordinary measures for those struggling to meet their financial obligations. We have instituted various forms of relief, among them a reduction in interest rates on loan types, including credit cards, as well as loan instalment deferrals along with a waiver of penalty charges and fees,” BATT said.
- Assistance to NGOs under the umbrella of extremely robust and well-organised Corporate Social Responsibility (CSR) Programmes.
SUPERCHARGING ONLINE BANKING
“The development of technology within the banking industry has long been on the rise, but the pivot to digital has been supercharged with the onset of the COVID-19 crisis,” BATT said. Pointing to a significant increase in the use of online and mobile banking across all sectors, including among customers who were disinterested or not digitally savvy in the past, BATT said: “There are signs that persons are more willing to adopt digital banking as their new default…COVID-19 disruptions have underscored that technology will play a more profound role in the banking sector. Digital offerings of online and mobile banking will remain a key channel of customer interactions for the foreseeable future while technology will be central to our new normal.”
OTHER KEY DEVELOPMENTS IN 2019/2020
- The cotton $100 note was replaced by a polymer $100, which became legal tender on 9 December 2019. By April 2020, 94.2% of the estimated 81.7 million cotton notes that were in circulation were returned to the Central Bank.
- The Central Bank unveiled the concept designs for the entire suite of polymer notes in February 2020 with distribution to the public expected in late 2020.
- Also in February, the Trinidad and Tobago International Financial Centre launched FinTech T&T to create a collective voice for financial technology stakeholders. FinTech aims to improve the delivery of financial services in T&T and the wider Caribbean and promote a cashless future through the use of financial technology.
- Republic Bank Trinidad and Tobago (Barbados) Ltd purchased 75% of Cayman National Corporation Ltd for US$198 million. Its parent company, Republic Financial Holdings Ltd, also formally acquired seven Scotiabank operations in the Eastern Caribbean.
- A joint IMF/World Bank Financial Stability Assessment Programme (FSAP) of the domestic financial system was completed in February 2020 and will guide the Central Bank’s priorities going forward.
- Introduction of a Government-sponsored SME Stimulus Loan Facility at zero interest and a two-year moratorium on principal payments, which is being implemented via First Citizens Bank, Republic Bank Limited, RBC Royal Bank and Scotiabank. The loan programme of up to TT$300 million will help micro, small and medium-sized businesses impacted by the COVID-19 pandemic. The loan can only be used for salary payments, working capital and purchase of raw materials; will not incur any handling fees; and all interest will be paid by the Government.
- In addition, the Government has also instituted a Liquidity Support Loan Programme of $100 million through the Credit Union movement for its individual members to provide COVID-19 Emergency Income Loans, plus an additional $100 million for business loans to its members.
- March 2020 – the unprecedented lowering of the Repo rate by 150 basis points to 3.5% by the Central Bank with a simultaneous reduction in the primary reserve requirement applicable to commercial banks by 3% to 14% – the first such reduction since June 2004.
- Most commercial banks adjusted their prime lending rates. Interest rates on loans tied to prime fell automatically while loans with variable interest rates were also adjusted.