The private sector has been advised to take advantage of low interest rates in the current banking and financial environment to make capital investments and for working capital financing. That was the recommendation from Rob Johnston, Head, Caribbean Banking, RBC, when he spoke at ICATT’s Annual International Finance & Accounting Conference 2016, at the Hyatt Regency Hotel, Port of Spain.
“There is a time in an economic cycle to make investments. Some companies can profit in the present financial environment. Our advice to our clients is to take advantage of the low interest rate environment to make capital purchases and for working capital financing. Companies should make more efficient use of excess liquidity in the system by allocating surplus cash into strategic vehicles such as mutual funds,” he said.
Noting that the local, regional and global economies were experiencing challenging times, Johnston pointed out that the middle class was under pressure and getting smaller.
“We have seen the middle class contracted and depressed. The result is that there are all sorts of social challenges as a consequence of these difficult economic times,” he said.
The RBC Caribbean head said that among the turnaround prescriptions implemented by the banking group in the challenging environment are increased collaboration with Treasury, meaningful partnering with industry associations, government and regulators, as well as offering clients a choice on investment vehicles, accelerated loan collection efforts, greater focus on attracting quality loan clients and positioning the bank’s products to provide value for money.
Johnston outlined some of RBC’s turnaround efforts to add value through convenience, such as expanded investments into mobile, online and ATM banking services.
“Cash is very expensive. Cash is very risky. We give our clients options on how they should bank. We provide value for money. Success is defined by utilising technology where financial decisions are made, not by the number of branches you have,” he explained.
Johnston said with the current challenging economic environment, governments were pursuing revenue sources in a more aggressive manner with the result that revenue from taxation measures is increasing.
He acknowledged that the regional banking sector fully appreciated the pressures faced by clients for foreign exchange, especially in Trinidad, Barbados and The Bahamas.
“We are living in a complex world. And it isn’t going to change in the near future,” he said.
Drawing reference to the co-relation between interest rates charged by banks and interest on deposits and RBC’s own operations, Johnston explained that there must be a proper level of flexibility for banks to meet their commitments, including regulatory and other charges.
“As a region, we can expect more challenging times in the years ahead. We recognise that we have a role to play and we are working with regulators, governments and other players in providing constructive inputs toward making wide-impacting financial decisions. Forums like these are absolutely appropriate given the current global economic climate. The information we share here will develop workable turnaround prescriptions and buffer our economies through difficult times,” Johnston said.
