Deposit insurance to level playing field, says largest credit union

Chief Operations Officer Barbados Public Workers Co-Operative Credit Union, Corinne Clarke, MC Carl Padmore, And Acting CEO Barbados Public Workers Co-Operative Credit Union LeVere Catlyn The nation’s largest credit union has welcomed long-awaited state-backed deposit insurance as the measure that will finally remove commercial banks’ competitive advantage, saying it is now positioned to lend more aggressively to first-time borrowers. The Barbados Public Workers’ Co-operative Credit Union Limited (BPWCCUL) has hailed the passage of the Protection of Depositors Act, noting that the impending state-backed deposit insurance will finally level the competitive playing field with traditional commercial banks. Group Chief Executive Officer LeVere Catlyn and Chief Operations Officer Corinne Clarke addressed the changes in an interview with Barbados TODAY. The credit union has been anticipating this legislative shift for an extended period. The new framework aims to extend state-backed deposit insurance to credit unions for the first time, a move designed to offer greater security for the savings of thousands of Barbadians. Catlyn also noted that a new bankruptcy and insolvency framework is being developed to deal specifically with financial institution resolutions. According to Catlyn, the journey towards securing these critical protections for credit union members is the culmination of a decade of foresight. He revealed that the institution had proactively begun preparing for this eventuality years ago, setting aside funds to cushion the eventual transition. He said: “This is probably about ten years now that we would have started on this journey. We… put aside $260 000 back in the day for when this time comes. That said, we do know that it is going to be much more than that. But we believe that the protection of the members’ deposit is what’s important, and that is something that the members were asking for over the years.” You Might Be Interested In For years, commercial banking institutions have enjoyed a distinct advantage over credit unions by offering legally mandated insured deposits. Catlyn noted that the lack of comparable insurance had previously created a disparity in the local financial market. He stated that this new legislation will effectively remove the comparative advantage that other financial institutions previously held over the credit union sector, making co-operatives an equally secure home for primary savings. The tangible benefit to the average credit union member is substantial, in Catlyn’s view. Under the anticipated regulations, individual member deposits will be insured up to a specific threshold, offering peace of mind in an unpredictable global economy. “It benefits the customers from the standpoint that if the organisation was in difficulty to the point where it was closed, their deposits will be insured up to $25 000, so it provides them with deposit coverage.” Beyond safeguarding its own immediate membership, the group chief executive underscored the Public Workers credit union’s systemic importance within the wider Barbadian co-operative movement. In the event of a failure within the industry, the credit union has historically acted as a stabilising force, he added. Catlyn pointed out that the institution maintains a philosophy of stepping in when smaller credit unions on the island face insurmountable challenges, often merging with them and absorbing their assets. Consequently, members of those smaller, absorbed entities will seamlessly benefit from the robust coverage and financial stability that Public Workers’ maintains. When asked if the new legislation met all the institution’s expectations, the chief executive offered a cautiously optimistic assessment, indicating that while the baseline requirements for member security have been satisfied, the ultimate financial impact on the credit union’s operational budget remains to be fully seen. “I haven’t really seen the true cost as yet, and it depends on where that true cost lands in terms of the overall expectation, but in terms of the minimum expectation, it has.” In addition to navigating the new regulatory environment, the Public Workers credit union is also operating within an improved macroeconomic climate. In the credit union’s 2026 separate annual report, it noted that its heavy investments in Government of Barbados sovereign debt securities were upgraded from B- to B+ with a stable outlook by Standard & Poor’s. Addressing how this improved sovereign bond rating affects the credit union, Catlyn said that it does not alter its day-to-day liquidity management, as that liquidity is driven largely by member deposits. But he insisted that the upgrade has a profound and highly positive impact on the institution’s income statement regarding statutory loss provisioning. “What it does is affects us having to put aside losses in accordance with the International Financial Reporting Standards,” Catlyn explained. “The lower the grade of the sovereign debt, it means that the future outlook is tending to a more delinquent government bond. Because of changes in the financial reporting standards, we now have to put aside losses for the future. Once upon a time, you used to avoid losses as they were incurred, but now you have to anticipate what those losses are in the future, and part of that anticipation comes from the rating of the bond.” He provided historical context, recalling the period when the government first defaulted and restructured its debt, during which the credit union was forced to set aside approximately 23 per cent of its overall government debt investments to account for expected credit losses. In the wake of numerous economic upgrades, that provisioning requirement has significantly decreased, freeing up capital on the balance sheet. With a fortified balance sheet and an improved economic outlook, the credit union is now shifting its focus towards aggressive membership penetration and expanding its loan portfolio. Operations chief Clarke outlined a strategy for issuing more loans, particularly targeting first-time borrowers who already use the credit union for basic savings. “Traditionally, over time we have opened our lending practices, our principles, and so new members are able to borrow once their risk meets our appetite,” Clarke told Barbados TODAY. “So first-time borrowers, obviously we are opening up more, and we’re trying to reach those persons who are saving more and not borrowing, or borrowing elsewhere.” The credit union’s strategic mandate is to ensure that its members consolidate their financial lives entirely within the co-operative framework. It plans to use state-backed deposit insurance and the financial flexibility afforded by reduced credit loss provisions to offer more competitive credit products. “We are trying to penetrate our membership,” Clarke said. “We will be reaching out to them with better products so that that will cause them to come over to where they belong with their total portfolio, and not just their savings.” (RR)