Resilient during COVID-19

Business

Resilient during COVID-19

Credit unions bypass multimillion-dollar COVID-19 liquidity support

BY DURRANT PATE
Observer Business Writer

Wednesday, August 05, 2020

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Jamaica's credit unions proved their resilience to COVID-19 after bypassing hundreds of millions of dollars in liquidity support extended by both the Bank of Jamaica and their umbrella grouping the Jamaica Cooperative Credit Union League (JCCUL).

JCCUL Chief Executive Officer Robin Levy disclosed that from the 25 credit unions operating in Jamaica only two have applied to its Liquidity Support Fund.

Speaking at a recent Jamaica Observer Business Forum, Levy was quick to point out that the two credit unions in question, which he did not name, did not apply out of a desperate need for liquidity support “but it was a precautionary measure”.

The fund, managed by the JCCUL, is capitalised from the combined internal resources of credit unions across the island, and was created to provide liquidity to any credit union in need, arising from significant decline in loans and or cash inflows. There is a $20 million cap on draw down, but Levy emphasised that “credit unions have hardly used it”.

BOJ LIQUIDITY SUPPORT FACILITY

Levy pointed to a similar facility extended by the BOJ. According to the JCCUL CEO, “The BOJ recognises credit unions as systemically important to the financial health of the country has set up their own discount window for the first time ever to allow credit unions to also get liquidity support.” Levy states that this is historic, never happened before.

“I can report to you that it [funding] has never been used. No credit union has used it yet,” Levy asserted.

Elvis King, CEO of EDUCOM Credit Union supported Levy's position that Jamaica's credit unions have been resilient and have not found themselves in any liquidity challenges.

King, who was also a part of the business forum, made the point that local credit unions are not experiencing a situation where excess liquidity has been going out in the form of loans, nor has there been any significant impact on savings. Hence, there is no need for liquidity support at this time among the credit unions in Jamaica.

The EDUCOM CEO explained that not much is going out in loans, which has aided the liquidity positions of credit unions. Giving his assessment of the capital situation of many credit unions, Levy says savings have stayed relatively wflat with many loans still being repaid.


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