Categorized | Business, National News

Scotia Bank Allowed to Operate Without Impunity, Says Cash

Following Scotia Bank’s announcement to slash as many as 1,500 jobs and shut down at least 120 of its branches around the world including many of them in the Caribbean, Free National Movement (FNM) Chairman Darron Cash said that this announcement is “very disturbing” and he admitted to the Bahama Journal that both successive governments are at fault for how the Canadian bank has been allowed to operate in the country without impunity for so many years.

“For a long time there has been a sense that they have gotten away with impunity in operating in this country, paying very little taxes, yet every time it becomes economically beneficial for them to either ship locations abroad or downsize it always appears to be the Bahamian staff members who are on the receiving end of all the pain while they repatriate huge amounts of profits,” he said.

“So it’s very disturbing that they are making the announcement of layoffs, we hope that those layoffs would be proportionate across the territory and that The Bahamas would not endure an unfair amount of those layoffs.”

According to the statement found on Scotia Bank’s Canadian website about two-thirds of the reductions will be in Canada and one-third in international locations.

In addition, the restructuring process is expected to affect employees at all levels of the organisation.

Meanwhile Mr. Cash maintains that the government must protect Bahamian jobs.

“Whether it is in the banking sector or in the hotel sector this government has been far too close to the business interest fighting for their needs as opposed to fighting for the needs of Bahamian workers,” he said.

Foreign Affairs Minister Fred Mitchell recently responded to Scotia Bank’s statement, he said that the bank’s announcement reveals that the Caribbean economy is underperforming and that this matter should be the major focus of every government in the region.

“That is a convoluted way of saying that the Caribbean as a region has an economy which is under performing and therefore not making money for the Bank,” he said.

“I will argue later that we are spending too much time on smaller issues when that should be the central focus – that of fixing the under performance of our economies. We know the following about other banks in our country, First Caribbean/CIBC wrote down $225 million in the second quarter for The Bahamas alone and $400 million for the region. Scotia just wrote down $109 million for the region, the Bank of The Bahamas wrote down $69 million. What the statement about the banks shows is that what we have in The Bahamas is a life and death struggle over many larger and greater issues which may affect our country’s survivability. The question really is what are we doing to ensure that there is a future for you and your children 30, 40 years from now?”

Early last week, Scotia Bank’s President and Chief Executive Officer Brian Porter announced that the bank has initiated certain restructuring initiatives in order to improve the speed and quality of service it provides its customers, to reduce costs in a sustainable manner, and to achieve greater operational efficiencies.

He added that the bank also expects to record additional loan loss provisions worth millions of dollars.
“The Bank expects to record additional loan loss provisions of approximately $109 million, this relates primarily to three existing net impaired loans within the Caribbean region’s hospitality portfolio,” the statement read.

“Due to the prolonged economic recovery and continued uncertain outlook, these additional amounts bring the net carrying value in line with the expected net recoverable value. There is also an additional amount in Canadian Banking related to a change in methodology in estimating loss parameters on the unsecured lending portfolios.”

Scotia Bank Bahamas also released a statement on the matter last week, according to the press release, the bank is still undergoing its review and while this process will take some time, it will be carefully planned with consideration given to all affected stakeholders including employees and customers.

“Scotiabank’s recent global announcement is about enhancing service to our customers while reducing structural costs,” the statement read.

“In recent years, Scotiabank has worked to build our market position, both through organic growth and selective acquisitions. This growth has served Scotiabank well but has also created some overlap and duplication of services throughout our footprint. As a result, we undertook a review of our operating model and international distribution network and found opportunities to strengthen our retail presence by investing in areas that are going to improve the speed and quality of service for our customers. In keeping with Scotiabank’s values, we are committed to treating employees fairly, equitably and with respect.”

Written by Jones Bahamas

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