2024 Local Content Summit: Traditional “risk averse” ways of banking can no longer continue – Pres Ali to local banks

…urges banks to facilitate, not hinder, more local investments; expand regional footprints

Guyana’s banking sector needs to be more proactive in seeking out and facilitating investment opportunities locally and abroad to help expand the economy. This sentiment was expressed by President Dr Irfaan Ali during his address to the opening of the Local Content Summit on Tuesday.

Speaking to stakeholders in the public and private sector, President Ali noted that the traditional “risk averse” ways of banking can no longer continue. In fact, he said the local bankers do not engage in banking but rather “traditional approach to money management.”
“There is one element of this equation that I think is not given enough emphasis. And that is the banking sector. How do we get the banking sector to work closer together. To integrate more seamlessly. And to address the issue of scale. I keep mentioning at these seminars that the banking model needs to change.”
“Banks can no longer be a counter that you deposit money and you get some… well you don’t get much interest anyhow. And you get a business model around that. And you’re very risk averse, so you look at the best opportunities for lending. And you lend to that, so your returns are very high. As can be seen in your balance sheets annually. That is not banking,” the President said.
The Head of State added that there needs to be a shift in the mindset of the bankers. He called for bankers to use more analytical tools to identify opportunities and propose same to their clients with a possible 10 per cent or 15 per cent return on investment.
“Banking and finance are an art, an art of utilising the liquidity in the system through structural mechanism to grow wealth and create wealth. And we need to move up the value scale in the banking sector to have more investment type bankers who are on a daily basis analysing the opportunity in the market,” he said.
“The banks are still working in a very archaic fashion, waiting for someone to bring in a business proposal to get financing and then they look at the least risky opportunity, but that needs to change. The bank has to see itself as a facilitating role in the development and expansion of the economy.”
Further, he said there is scope for a regional expansion. In fact, the President revealed that there is at least one local bank establishing a regional footprint by setting up a branch in a different country. The President also challenged other companies including consultancies, contractors, and distributors to expand across the region too.
According to the Guyana Association of Bankers Inc. (GABI) website, there are eleven financial institutions. The list includes Guyanese-owned Guyana Bank for Trade and Industry and its subsidiary Guyana Americas Merchant Bank Inc, Demerara Bank Limited, Hand In Hand Trust Corporation Inc., New Building Society, Citizens Bank Guyana Inc and the Trust Company Guyana Limited, among others.
“If we are building the capacity of companies here, what is the market we are targeting? Is it only building that capacity and scale and capability for the local market? Or do we now look at this capacity and scale that we are building locally and find regional opportunities, find extra regional opportunities through which we can deploy this capacity and expand the economic and financial opportunity for the local business? And that is where we have to position ourselves,” the President emphasized.
Other banks operating in Guyana include Republic Bank Limited which is also established in other Caricom countries and Ghana, Bank of Baroda, Scotiabank Guyana and the New Hayven Merchant Bank. (G3)