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Straight talking, straight banking

Interview - March 5, 2012
Mr. David Dulal-Whiteway (Managing Director), and Mr. Ronald Ramkissoon (Senior Economist – Manager E.I.U.) at Republic Bank, Trinidad & Tobago discuss how their conservative policies helped the bank remain solid during the crisis

The Global Financial Crisis had a great impact all over the world, especially in markets like the EU. Elaborate on the lessons that the banking sector has learnt from it and the strengths of the financial system of T&T?

We do a very simple thing: straight banking. The nature of our economy and the customers that we deal with have turned out to be a blessing as we haven’t gone through the financial engineering that other countries had to do. We have been around for 175 years and we know what to do and what not to do. The Barclays training has served us well in this particular situation. We understand what the market can handle and we are aware of what’s happening all over the world. We saw from early that this situation couldn’t last.

If you look at the whole banking industry of T&T, our competitors are mainly Canadian-based and that’s the most solid banking system at a global level. All the banks are strong in Trinidad and that’s why the country’s financial system remained solid. 

What would you say has been the contribution of Republic Bank to the development of the nation?

 We were here before the Central Bank: we were the bankers of the Government! Our history goes back to the abolition of slavery in 1837; the Bank started as a facilitator of commerce and a provider of money: we used to produce our Colonial Bank dollars back in the old days. We have developed relationships with the customers and the government ever since so we have undoubtedly had a very important role in fostering trade in the country.

In the early days when sugar was king, Barclays facilitated that trade. Our portfolio was heavy in agriculture and as the economy shifted to crude oil economy, we too were able to shift. We have grown with the country and no other bank can boast of that.

In 2010, Republic Bank made a profit of TT Dollars 1.1 billion. Comment on the implemented strategies to achieve it.

When you are in a small country, you look at things at a portfolio level. You don’t see the forests, you see the trees. If you work in a large country, it’s difficult to see the trees and if you lose sight of them that’s when you get into trouble. The subprime mortgage crisis was caused because you cannot take junk and package it and end up with something other than junk. One wonders how somebody can package bad loans and get it into a good loan. For us, to get to the top, each individual has to be good and that’s what we have managed to do.

We have maintained very good capital ratios: Republic Bank has a 30% capital ratio while the requirement is 8%. For example, in the developed world most banks are offering 8-9% capital ratios as they try to keep the capital as low as possible to get a higher return on equity so your stock options are also higher.

The Republic Bank culture is different: our performance and bonus payments are based on how the Bank has done as a whole. We are here for the long term: you must eat little and live long. Banks are all about long-term relationship building. You need to maintain a long-term view to keep on growing. In 2008, our view was not look at the income statement but on the strength of the balance sheet. Since 2008, we didn’t have any kind of decline.

How is Republic Bank fostering the development of the SMEs in T&T?

We have the largest branch network and in each one of them, we have small business lenders. Our intention is to ensure that we are close to our customers. We review the credits for our SMEs, as we understand that they don’t have the strength of the corporate businesses. We also train our people on how to analyse the financial performances of SMEs.

Republic Bank works closely with the Business Development Company and their loan guarantee arrangement. We don’t provide risk capital; we provide secure lendings. If small businesses cannot find the additional security, then BDC provides that guarantee. Even before the Government set up the BDC, we had a Small Business Window: we’ve always had that recognition for the SMEs.

One of the reasons of an SME’s lack of success is a lack of necessary training. This is why we collaborate with the Arthur Lok Jack Business School to sponsor a program where we bring entrepreneurs to be trained in all the aspects of business. We have also teamed up with the IFC to put together the SME Toolkit. It helps you to understand what you need to have to start your own business and we are currently adapting this global program to the needs of the country.

No business starts big and if you use that philosophy, if you are with the customer from day one, the customer will be with you all the way to success. 

Comment on your expansion strategies and how you are going to maintain your growth in 2012

We need to look at diversification from two aspects: we need new industries in the country and we need to find our national champions and get them outside. Republic Bank is a local winner that invests abroad and with that investment, we can help to diversify the national economy.

How would you say the US could help in the development of T&T?

FDI has always been a part of the Caribbean and T&T. It has served us well in the past and it has played a key role in the energy sector. T&T has always had a strong tie with the United States. What we recognize is that some of the US investors have recently come under pressure because of the global financial crisis and T&T has realized that we need to work harder at attracting the US investment. We see the importance of investment for the national growth. It is an opportune time to speak to the foreign investors to say that we are ready. We need to focus on the other attributes and possibilities of T&T: as a bank we are very much willing to work with the foreign investors to make things happen.

Republic Bank has made things happened through its CSR program: The Power to Make a Difference.

Our purpose is to build successful societies. There is a close linkage between how the society is performing and how we are performing. We were always involved in providing charity work to our communities. 10 years ago we sat down and thought on how to make an actual difference. Our first focus was the elderly and we worked with different NGOs to make life more comfortable for them. Our focus now is on the differently-abled citizens. We are trying to ease the difficulties they face: for example, we have brought experts to train our teachers on recognizing autistic children.

We are doing the easy part; the NGOs are the real heroes. They are the ones making the difference in the society and they are the ones who need the support. There are still many areas where there’s need for assistance and greater development in Trinidad & Tobago. 

What’s your dream for the country?

A lot of people like to talk about GDP but I would like to live in a country where crime is not an issue and where we have a better road system. To sum it up, I want a country with better living conditions.

Five years ago, T&T wanted to develop an International Financial Centre. I don’t think we had a competitive advantage but if you look at what is required, you need a good educational system, a good transport system, dealing with things like crime, etc.; those are critical ingredients to make it successful. Therefore, I supported it even if we had no new bank coming in, because if we got the ingredients right, we would have improved the life and the living conditions of the people of Trinidad & Tobago and that’s the ultimate goal of my business.