First Citizens CEO: Forex reserves still healthy

FIRST Citizens Group CEO Karen Darbasie says the Central Bank of TT (CBTT) has an unenviable task of balancing this country’s net foreign reserves – held in US dollars – with the public’s demand for foreign exchange (forex).

“The reserves are falling because the CBTT is attempting to supplement the shortfall in the third-party purchases by the financial institutions. That’s effectively what they’re trying to do and it’s a real balancing act. I wouldn’t like to be in their shoes at all.”

“The banks always are concerned because, of course, the client requests all come to us. We’re the first line that receives the client requests for foreign exchange and as in any service institution, we want to be able to deliver to our clients their needs.

It’s a balancing act for us, it’s a balancing act for the Central Bank but I’m not sure how else the Central Bank will operate.”

Darbasie was responding yesterday to a question about TT’s net official reserves having hit a ten-year low because demand exceeds supply. The question was posed during a press conference held after First Citizens Bank’s 21st annual meeting of shareholders at Hilton Trinidad, Port of Spain.

Comparing the reserves to savings, Darbasie said the CBTT is likely trying to answer this question - “Do you say to the public, I’m not going to tap into the savings and leave you not getting any portion of what you need or do you tap into it a little bit and try to balance it?”

Arguing that the reserves “are still at very healthy points”, Darbasie said the Heritage and Stabilisation Fund “has not been tapped into other than for taking interest income out of it for supplementing.”

Darbasie is also vice-president of the Bankers Association of TT. While she didn’t specifically refer to her other portfolio, the First Citizens Group CEO did express concern on the sector’s behalf.

“So we are concerned but from a First Citizens and from a banking sector perspective, we understand that we have buffers as an economy that the regulator and the government are trying to use in as judicious a manner as possible to balance the needs.”

In other news, although the five per cent increase in corporation tax on commercial banks came into effect on January 1 – banks must now pay 35 per cent – “at this point in time, we are not looking at increasing fees,” Darbasie said.