ST. VINCENT: – Leader of the Opposition Arnhim Eustace wants the government of St. Vincent and the Grenadines to say if it intends to privatize the state-owned National Commercial Bank (NCB) as its profits fell by 92.7 percent last year.
It is rumored that financial institutions in Trinidad and Tobago and Grenada are interested in investing in the NCB, even as the Dr. Ralph Gonsalves government in Kingstown speak of “new modalities of ownership”.
“All those words simply mean [is that] they are going to sell it,” Eustace said on Monday.
He was again raising concerns about the bank, saying its profits fell from EC$15 million to EC$1.1 million and that the institution was “in trouble”. (Go to the homepage to subscribe to I Witness-News)
He said the financial health of the NCB was a sensitive issue and comments about it have implications for the bank’s future.
“I have refused, because I think that it is inappropriate for me at this time, with the general climate in the country and the state of the economy, to be making statements for which I don’t have all the detailed information and which can precipitation actions by citizens, which would not be in the best interest of the bank,” Eustace said on his party’s radio talk show.
“But I am saying [that] the government must handle the issue and handle it now,” he added.
“We have to be very careful with these institutions,” he said, mentioning also the National Insurance Services.
Eustace, a former prime minister and former minister of finance, said he noted a few years ago that the bank was undercapitalized, at EC$82 million.
He said this was about five times less than similar banks in fellow Eastern Caribbean Currency Union member nations St. Kitts and Nevis and St. Lucia. (Follow I Witness-News on Facebook)
He further said that most of the loan losses that were provided for in 2009 came from statutory enterprises.
“… [L]osses were put in there – provisions – to cover their losses, which have endangered the health of the bank. …In addition to that, there are other loan losses too,” he said.
When the bank provides for these losses, it is treating them as expenses,” Eustace said.
“So, they come from your pocket. So that is why the profit dropped so drastically last year. And I know that they have more loan losses to provide for this year. So I am not expecting the bank to make a profit 2010,” said Eustace, a trained economist.
“I just want to make it clear: It is a national institution and it is a matter that has to be taken with the utmost seriousness” he added.
He said that with the government “looking to sell” the NCB, there were implications for the government’s overdraft there, saying that private owners might not allow the government to exceed the overdraft limit.
“And therefore they will be forced to be more prudent with their finances and how they run the government accounts,” Eustace said.