ECCB
ANNUAL REPORT 2014/2015
1
EASTERN CARIBBEAN CENTRAL BANK
FOREWORD
T
he global crisis and its impact on the commercial
banking sector in the Eastern Caribbean
Currency Union (ECCU) have raised fundamental
issues for the member countries which could affect
their development for years to come. The structural
characteristics of these economies, namely, their
extremely small size, openness and vulnerability to
external shocks and natural disasters, the seasonality
of the main productive sector, tourism, and the direct
link between the business cycles of their main trading
partners and their own economic performance, have
been exposed and exacerbated by this crisis.
The commercial banking sector is the dominant sector
in the financial system and its sheer size, in relation to
the output of the economies and amount of government
revenues and expenditures, makes it a critical factor in
our economic system. The banking sector is the major
mobilizer of savings, with savings deposits totalling
$8.5 billion at 31 March 2015. Loans and advances
of $13.4 billion were extended by commercial
The commercial banking sector is the
dominant sector in the financial system
and its sheer size, in relation to the
output of the economies and amount of
government revenues and expenditures,
makes it a critical factor in our economic
system
banks as at that same date. The banking sector also
operates the payments system in which approximately
$2.8 billion is processed in cheques every month, with
the average number of cheques being 736,000.
The current status of the banking sector is that it
can be considered as stable but fragile. The number
of non-performing loans is now significantly above
the ECCB benchmark of 5.0 per cent of the loan
portfolio, and the capital of many banks has been
considerably reduced. On the other hand, there has
been a significant increase in excess reserves, as
well as the net foreign assets of the banks. This has
been due to a combination of factors, including the
number of non-performing loans, the tightening of
underwriting standards and the weak performance of
the economies.
The conclusion that one can draw from both the basic
structural characteristics and the current situation in
the banking sector, as outlined above, is that there is a
fundamental misalignment of these factors which does
not make the situation conducive to rapid growth and
sustainable development. This can be explained by the
historical conditions under which commercial banking
developed in the region and our seeming inability to
Banking and Development in the Eastern Caribbean Currency Union
Governor of the ECCB
The Honourable Sir K Dwight Venner
