Banking, Investment & Financial Services

Updated: September 2019

Trinidad and Tobago’s banking sector has been adapting to a dynamic macroeconomic environment and has made important advancements from being a simple underdeveloped segment to a reasonably established system with a variety of financial instruments when compared to regional markets. Given these developments, regulators will need to be equipped to address any financial system vulnerability.

From a regulatory standpoint, the Central Bank of Trinidad and Tobago (CBTT) is meticulously monitoring Systematically Important Financial Institutions (SIFIs) and examining developments in the Financial Technology (Fintech) space.

Financial Reporting Standard 9 for Financial Instruments. While some banks have early adopted this standard, other financial institutions are still in the process of implementation and the CBTT continues to closely monitor the implications of IFRS 9 on capitalisation levels. One development is the classification, measurement, impairment and hedge accounting for financial instruments under the relatively new accounting standard, IFRS 9 or International

The implementation of Basel II/III risk-based capital standards for institutions licensed under the Financial Institutions Act, 2008, is a key strategic priority of the CBTT. The project aims to enhance the resilience of the banking sector and allow for more comprehensive assessment of risks and resilience at the institutional and group level. Accordingly, the CBTT launched a parallel reporting period for licensees and financial holding companies, which commenced in April 2018 and is ongoing. Full implementation of the Basel II and III frameworks is expected to be completed by 2021.

The CBTT issued a revised Guideline on Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT) in April 2018. The revised guideline provides more risk-based and sector specific guidance on the implementation of an AML/CFT framework. Simultaneously, commercial banks would have developed the necessary structures for strengthening their AMF and counter-terrorist financing (CTF) due diligence and surveillance platforms to address the withdrawal of correspondence banking services from some regional institutions.

Short Term Challenges


In March 2019, the European Union (EU) released a revised blacklist for tax haven countries. The new list includes Trinidad and Tobago among 14 other countries that face funding restrictions and investments from the European Investment Bank. EU governments can choose to add their own sanctions against the blacklisted countries. Being on this blacklist could potentially result in a loss of correspondent banking relationship (CBRs) which will increase the cost of doing business between the banking sector and the international community. The loss of CBRs can also affect the Trinidad and Tobago economy through reduced international trade, remittances/investment flows and loss of grants given by the EU.


Money Laundering and Terrorism Financing activities have been on an upward trend with the Financial Intelligence Unit of Trinidad and Tobago (FIUTT) receiving a total of 1,100 suspicious transaction reports/suspicious activity reports (STRs/SARs) for 2018, an increase of 25% from the previous year. The 1,100 STRs/SARs included both completed and attempted transactions of which 933 are related to suspected money laundering and 167, to suspected terrorism financing. Of this total, around 42% or 463 of these reports originated from the banking sector. Accordingly, it is imperative that due diligence is employed to combat money laundering and terrorism financing as this continues to be a major challenge facing the financial industry, including the banking sector.


The latest data available shows an increase in the unemployment rate to 4.4% in the final quarter of 2017 from 3.6% in the corresponding quarter of 2016. In the absence of official labour market data for 2018, alternate indicators used by the CBTT show a deterioration in the job market, as retrenchment notices increased by 38% in 2018 and print media advertisements declined by 22.1% for 2018 indicating slower demand for labour. This increase in retrenchments may have resulted in a higher default in loans by individuals and ultimately, an increase in the NPL in the banking sector. The average NPL ratio for the three largest banks for 2018 was 3.30%, an increase from 3.09% in 2017.

The latest CBTT financial sector stress test highlighted three key threats to the financial stability of Trinidad and Tobago – deterioration in the quality of consumer loan portfolios because of prolonged economic slowdown and increasing unemployment; higher public sector-related NPLs due to rising interest rates and withdrawals of deposits from State enterprises; local capital outflows as a result of an improving US economy and tightening Fed policy which saw yields on similar tenors in the US rising much faster than they did locally, leading to a further reduction of the TT-US differentials.

Despite a challenging economic environment, Trinidad and Tobago’s banking sector continues to perform well. The International Monetary Fund (IMF) reported that commercial banks in Trinidad and Tobago are well capitalised and possess strong credit quality assets with a 3% NPL, which is the lowest in the region. According to the Global Competitive Index (GCI) in 2018, the “Soundness of Banks” rank for Trinidad and Tobago was 24 out of 140 participating countries, a significant improvement from 34 out of a total of 137 countries in the 2017-2018 GCI.

The Trinidad and Tobago economy is projected to recover as new energy projects are initiated in 2019. With several projects announced in the Government’s Mid-Year Budget Review in May 2019, the banking sector is expected to be supported by an acceleration in the execution of Government’s capital programme. Trinidad and Tobago banks are adequately capitalised with an industry average Capital Adequacy Ratio of 20.9% in 2018 well above the regulatory minimum requirement of 10%. The sector is poised to perform well in the coming years, notwithstanding the challenges which it is expected to face in the short term.


First Citizens Investment Services Limited, a subsidiary of First Citizens Bank Limited, has prepared this report. It is provided for informational purposes only and without any obligation, whether contractual or otherwise. All information contained herein has been obtained from sources that First Citizens Investment Services believes to be accurate and reliable. All opinions and estimates constitute the author’s judgment as at the date of the report. First Citizens Investment Services does not warrant the accuracy, timeliness, completeness of the information given or the assessments made. Opinions expressed may change without notice. This report does not constitute an offer or solicitation to buy or sell any securities discussed herein. The securities discussed in this report may not be suitable to all investors, therefore investors wishing to purchase any of the securities mentioned should consult an investment adviser.

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