Premier David Burt: launched broadside on banks for soaring fees
by Jonathan Kent
Significant business developments that made the news in recent months:
It’s been a lively period for the banking sector. In June, the Bermuda Monetary Authority granted the first new full banking licence in 21 years to Jewel Bank, which also received a digital asset business licence. Jewel’s focus is to service the core banking, payments, and settlement needs of digital asset firms and exchanges, those based in Bermuda and overseas. The news is significant because it means that the 15 licensed firms in Bermuda’s growing digital asset sector will for the first time be able to access banking services on the island, as established local banks have so far shied away from their business.
In July, Premier David Burt ruffled a few feathers when he lambasted the local banks for extravagant fee increases. Some local banking fees had risen by 400 per cent, he claimed. Mr Burt launched the broadside on banks in the House of Assembly, as he introduced the Banks and Deposit Companies Amendment Act 2022 to provide the Bermuda Monetary Authority the power to impose codes of conduct on deposit-taking institutions. He added that if banks don’t take action to curb their fees, the Government will.
The economy is a mixed bag. The underlying trends of slumping retail sales and rising inflation would appear to point towards recession. Government figures showed retailers took less at the till for nine consecutive months up to March this year, although there was a strong rebound in April. The official inflation rate, as measured by the Consumer Price Index was measured at 3.5 per cent in April, a ten-year high. However, reported comments from businesspeople such as Zach Moniz of Lindo’s Group (who said food inflation is about 8 per cent) and Penny MacIntyre of Rego Sotheby’s International Realty (who put rent increases at between 10 and 30 per cent over the past year) suggest the cost of living has climbed more sharply in the months since then.
On the bright side, the return of leisure and business visitors, by air and by ship, have inspired a rebound for hospitality, and tourism-related retail and services. Staff shortages at busy, but pandemic-diminished restaurants are now limiting the business they are able to handle, according to Phil Barnett of Island Restaurant Group. Also, retail sales data show a continuing upward trend in building materials sales, a sign that the construction industry remains buoyant, partly from demand for home modification from those continuing to work from home.
Evidence came to light that the soaring cost of healthcare is having an outsize impact on small businesses. A Bermuda Health Council report stated that companies with ten of fewer employees were the majority of businesses reported monthly by insurance companies as non-compliant in 2021. The report adds: “Small businesses state that they struggle to afford their monthly health insurance premium.” Hardly surprising, given that the standard premium rate, the basis for the minimal requirements of a health insurance plan, rocketed by 12.7 per cent last November.
In total, 463 employer policies were reported by insurers as inactive or terminated in 2021. There were 2,397 employees affected — the positive aspect was that this represented a 4 per cent decrease from pandemic-ravaged 2020.