Credit unions have been told that given their significant exposure to credit risk, they must ensure that their risk management framework is appropriately sound.
This plea came on Saturday evening from Minister of Finance, Christopher Sinckler, as he addressed the official opening of the City of Bridgetown???s (COB) Carlton, Black Rock Branch.
Mr. Sinckler stressed that in spite of the fact that credit unions are considered non-profit organisations, safety and soundness were paramount given their fiduciary duty.
???Oversight responsibility of assets totalling over $400 million is by no means a minor task or one where complacency should be allowed to set in…
???I encourage all stakeholders involved in the movement to focus specifically on prudent management practices for credit unions??? operations. This would include the development of internal controls and policies, which should be developed at a pace that is consistent with the growth and complexities of each credit union. Such measures would reassure member confidence and ensure long-term viability,??? he stated.
The Finance Minister said Government was mindful of the fact that the integrity of the non-bank financial sector must not be undermined, and gave the assurance that any credit union reform would be well suited to further the economic development and enfranchisement of its membership.
He acknowledged that the credit union sector was significant to the growth and development of Barbados and COB had played a vital part in this process.
Mr. Sinckler continued: ???The credit union sector has grown exponentially over the last decade, with membership increasing from approximately 123,952 at March 2005, to 170,049 at March 2015. During this same period, the asset base increased from approximately $788.2 million to $1.8 billion, and gross loans to members grew from $592.8 million to $1.4 billion.
???It is no secret that COB is the second largest credit union on the island, accounting for approximately 22 per cent of the total $1.8 billion in assets currently held by the sector. As at March 31, 2015, COB???s membership stood at approximately 55,642, while the asset base was $389.1 million; gross loans to members and savings held by members stood at $304 million and $333.9 million, respectively.???
The Minister noted that while credit unions were unique and could boast of being the only financial institutions which offered patronage rebates to members, they must strive to ensure that, in keeping with co-operative principles, some of the surplus gained was translated to additional benefits and improved service for members.
He suggested this would be a step in the right direction and the path that credit unionists would want the movement to continue to follow.??COB???s application was approved by the Registrar on October 20, 1983, and it now has three branches – Broad Street, Manor Lodge and Black Rock.