Some participants at discussions on Bank Act
Apr 24, 2015 – In a move that has won him much praise, Premier Don Romeo invited the media who turned out to join mainly legal practitioners and senior public servants to hear a presentation and discuss the new proposed Banking Legislative Reform Act. The Premier is seeking feedback from stakeholders before he presents it the Legislative Assembly.
This took place on April 10, 2015 at the Cabinet Secretariat Conference room at the Premier’s office. Duleep Cheddie delivered the presentation, taking questions as he proceeded and answering where he was able.
The small group immediately took issue with matters which they noted raised constitutional issues, like nighbouring Antigua who just gave the nod to the Act. There were issues where such matters as “The ECCB should not have the powers to dismiss an employee of a bank. They did not hire then and were not in the business decision to hire the person. The ECCB should only be granted the leave to issue a directive to the bank to remove the employee.
This act gives the ECCB the right to deny citizens the constitutional right to own and maintain ownership of property without a fair and transparent process.
Sir Dwight Venner, ECCB Governor
Section 83 of the proposed Act came in also for much discussion. “The ECCB is not a court much less a court of final decisions. As such if an employee or officer is exonerated from a criminal matter, how can the Act allow the ECCB to make decisions contrary to the findings of the Court? This provision allows the ECCB to be the judge, jury and executioner.
In Antigua problems with the legislation centre on provisions in the proposed legislation that bankers feel go against the workers’ interests. Bank workers are also concerned about the pecking order in the event that a bank has to be liquidated. The proposed Banking Act prescribes that the St. Kitts-based Eastern Caribbean Central Bank (ECCB) takes its fees and expenses as a priority above all other costs – even severance payments.
Sir Dwight Vener pursuing passage of the Act, the ECCB Governor in an interview with Observer Radio, conceded to imperfections in the proposed Banking Act, but denied that it’s a move to canvas more power, and stressed the urgency of the law in preventing a banking calamity.
Sir Dwight said there was already evidence that local banks were suffering as a result of the current regulatory environment, making reference to new challenges with correspondent banking relationships.
“You need to have a correspondent bank in another country to do things like letters of credit…if you don’t have that you are effectively cut off from the rest of the world. This is a matter of life and death for us,” the governor said.
“If we get drawn out between now and December trying to get this legislation passed, we are going to be in very serious trouble,” Sir Dwight said, adding that the Act was needed now, to “protect depositors” and establish our “international credibility.”
According to information during the presentation ‘The Act has already been passed in St Lucia and St Vincent and the Grenadines and had its First Reading in the Parliament of Antigua & Barbuda last month.’
Other information said “The law has been strongly criticised by those in the banking sector, lawyers and financial experts who argue that too much power is placed in the hand of the regulator.
But Sir Dwight rebuffed that claim, telling OBSERVER media that some of his critics were seeking to personalise the issue.
The general promotion for the Act finds that there has to be some amendments to the proposed Act which is considered necessary. When the matter goes to our Assembly and possibly before stakeholders in Montserrat will hear how the Government intends to proceed.
However Governor Venner discourages changes to the Act in respective parliaments, “because of the new economic union treaty” which established a single financial space in the OECS.
Under the Act, when the Central Bank grants a banking licence in one country, it automatically applies to other member states. Critics say this as an infringement of national sovereignty.
The minister of finance also takes a back seat in the granting of licenses, giving away that responsibility to the regulators.
The governor argued that notwithstanding that provision, the minister of finance is not excluded from the process due to his role on the OECS Monetary Council.
Sir Dwight also defended a contentious provision in the Bill requiring EC$20 million startup capital for banks, saying the five million dollars, which previously applied, is inadequate to protect depositors.
