Caribbean Confederation of Credit Unions Credit Union Leaders Symposium

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Caribbean Confederation of Credit UnionsCredit
Union Leaders Symposium

• Emerging Challenges..The Credit Union Response
• The Trinidad and Tobago Experience

Presented by Director Trevor Alleyne Trinidad
and Tobago On Saturday February 14,
2009 Raddison Fort George Hotel and Marina Belize
City
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Trinidad and Tobago Credit Union Movement

• Movement celebrated 60th anniversary in 2006.
• Over 110 active credit unions
• Over 350,000 members with assets of US 1B
• League, Chapters
• Central Finance Facility
• Stabilisation Fund
• Currently reports to the Co-operative Department
• Pending legislation - Central Bank Supervision

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Trinidad and Tobago Financial System

• Positioned to be Financial Capital of the
  Caribbean
• Strong supervision by Central Bank
• Economy driven by
• Energy Sector
• Strong Financial Sector
• Vibrant Construction Industry
• Manufacturing / Export
• Numerous Government Development Projects

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Impact of Global Financial Crisis

• Severe and rapid fall in energy prices
• Global meltdown in financial services sector
• Slowdown in construction coupled with increased
  prices for materials
• Revised National Budget (from oil at US 70 US
  45)
• Fall in rates for deposits
• Increased bank rates for credit
• Emerging job losses

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Impact of Global Financial Crisis (Cont.)

• Slowdown in Government spending
• Near collapse of multi-sector CL Financial Group
  (Approx 50 of financial services sector)
• Government action to safeguard deposits and
  pensions in CLICO, British American Ins, CLICO
  Investment Bank and CMMB
• Expeditious amendments to Central Bank Act and
  other enabling legislation

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Impact of change in local economy on Credit Unions

• High percentage of Credit Union long term
  deposits with CIB, BAICO and CMMB
• Likely reduction in interest earnings on these
  deposits at maturity - while committed to higher
  rates offered to members
• Reduced rates and returns on other deposits and
  investments
• Increased operating expenses
• Reduction in members borrowing
• Reduction in dividends paid to members
• Increased members delinquency
• Reduction in membership growth

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Credit Union Response

• Re-adjustment of fixed deposit rates offered to
  members
• Spreading investment risk
• Focus on recoveries
• Maintain member confidence

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Challenges for the Credit Union Movement

• Uncertainty in extent of global financial crisis.
• Increased demand for credit
• Mitigation of delinquency
• Reorganizing business in accordance with PEARLS
  and other prudential standards
• Increased compliance re new legislation

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Opportunities for the Credit Union Movement

• Back to Basics
• Co-operative education savings and prudent
  borrowing
• Position credit unions as safe financial
  institutions
• Small business lending
• Introduction of varying lending rates (e.g.
  lower than credit card and hire-purchase rates)
• Increased responsiveness to satisfying members
  financial welfare.