Over the past years, there have been many discussions about banking services here in the Virgin Islands, and, yes, there is a lot to be desired. Now that the people of Virgin Gorda are losing banking services, the banking issue is at the forefront once again. So let’s look at some of the issues that I have spoken about over the years.
First, look at a little history of banking by Virgin Islanders and banking in the VI. Before there were banks here, Virgin Islanders did their banking in St. Thomas. At that time, there was only the VI National Bank in St. Thomas and later on the West Indies Bank. The VINB came to Tortola in 1961 and opened in lower Main Street in the Norman Fowler Building (now occupied by Richardson’s Rigging and Dancia Penn & Co.). Over the years that bank changed ownership and name and is now Banco Popular. The West Indies Bank became Chase Manhattan, which came to Tortola in 1968 and is today First Bank. Barclays, now First Caribbean, opened in 1965, Scotiabank in1967. And in 1980 came our own development bank, now the National Bank of VI.
One of the conditions under which the VINB came to Tortola was that the government lift a restriction within the alien land holding licence in regards to the selling of foreclosed property. What this meant was that the bank could sell a foreclosed property to anyone without questions being asked. And that was a big price we paid to get our first bank, as we all know who bought the properties when the banks foreclosed.
Once the banks realised what weak leadership we had, it was easy for them to take advantage of the leaders and the wider population. The rest is history.
What we need is for the next government to put as much time and energy into making laws and regulations for the banks (and telephone companies) as they do for the rest of financial services. I do know that banking is part of financial services, but the regulations here do not benefit the residents.
Among my many concerns, the biggest is mortgage payments. When one is able to negotiate a loan, we all know that for the first years the majority payment of the loan is interest. Here are my concerns.
If your payment is $300 per month and $250 is interest and $50 is against the principal, why are you discouraged from paying additional payment against the principal? Though you can do so, the minimum the banks want is outrageous. One bank wanted a minimum of $100 when I first investigated this issue.
If for some reason you find a way to pay off the loan, there is an early payment penalty. That means that they are charging you a hefty fee for paying off your loan ahead of time.
My personal opinion is that one should be able to pay a minimum of $25 per month against the principal and there should not be a penalty for early payment. Do the math of a $300-per-month loan for 30 years paying an additional $25 per month against the principal and you will pay off the loan early and save on interest.
So we should all understand why we need our own commercial bank. I have been advocating this from the time the National Bank was the Development Bank. In April 2016 I wrote an article titled, “Time for better banking service in the Virgin Islands.” Here is a quote from that article: “While many of us can appreciate the service these banks have offered over the years to this territory, there are those of us who also realised that Virgin Islanders have been taken advantage of in many ways by these banks with the assistance of present and past governments as they failed to introduce and pass consumer protection legislation to properly regulate the banks.”
Once we have made our bank a full commercial bank, the VI government can ask the UK government to negotiate with the United States government to find a way that our bank may use the Federal Reserve routing system. (Remember in the 1960s the UK negotiated on our behalf for us to use US currency as our legal tender). This would mean that cheques sent to the US would clear just as fast as at the two USVI-based banks here.
‘Interesting situation’ in VI
Many residents do not understand the interesting situation we have here in the VI in regards to banking. People who have a savings account at any of the two US banks here can make deposits and withdrawals anywhere in the USVI, Puerto Rico and the US mainland. (I do not believe this service is offered by the other two banks with their branches throughout the Caribbean). In addition, if you have a chequeing account and you send your cheques to the US, they are cleared within three days after being deposited in comparison to the unreasonable amount of time that it takes for a cheque to clear here.
It is interesting to note that the legislators of the 1970s had the foresight to open a bank but the more educated ones since then did not have the foresight to improve the services. If the past governments, both VI Party and National Democratic Party, really and honestly had the VI and its people at heart, we would not be facing the banking situation we are facing today. I am of the opinion that all past legislators were scared to offend the foreign banks by having our own bank compete with them. So with the upcoming election, let’s listen to who will address this issue.