I do most of my banking online now and via my mobile apps. However, I had some banking transactions this week that required me to visit my bank physically. I made sure that as the doors opened, I was inside.

I love the staff at my bank; they are courteous, patient, and always willing to provide support, especially to people still getting accustomed to mobile banking, for example.

After settling on what I went in to do with the agent, I decided I wanted to transfer some money from my chequing account to my foreign exchange account. So I gave her the amount. As she was about to make the transfer an alarm went off in my head to enquire about the rate of exchange I would be given on the conversion. When she told me, I immediately stopped the transaction.

Silly me, then asked if it would be better if I brought the foreign exchange to deposit it.

“Ms Hanna, remember that once you deposit anything over US$500 you will be charged a fee.”

“Yes, I forgot.”

So, imagine also if you pulled US$600 of your money from your foreign exchange account and then decided to return it to the same account; the bank would charge you a fee.

I guess anywhere you turn in our banking sector “makka juk yuh”.

Today, our commercial banks are making huge profits for themselves using our money, in addition to charging us fees for simple things, like withdrawing our money, selling us foreign exchange at much higher margins than what they buy it for, and for high margins on the cost of funds or the actual Bank of Jamaica interest rates.

US$4.03 billion, or 40 per cent of our Jamaican bank deposits, are held in United States dollars and other foreign currencies.

As of August 16, 2024, the Bank of Jamaica’s counter rate for US is $155.9782. Furthermore, our exchange rate has been relatively stable over the last few years. Yet the variance in what our banks are prepared to buy foreign exchange from us versus selling it tells a different story from the central bank’s rate.

For example: National Commercial Bank (NCB) buys US cash at $136.30 and sells US cash at $157.80. JMMB buys US cash at $147.00 and sells at $158.50. Scotiabank buys US cash at $137.33 and sells at $158.90. CIBC buys US at approximately $139.00 and sells at $159.00. In most instances, there is a variance of $20.00.

I once recalled a family friend lamenting his disbelief in the actions of his local bank as he was purchasing US$10,000 from them to pay an overseas supplier for raw materials. The bank debited $1,570,000 from his account to purchase the foreign exchange and sent the money off. However, his bank made an error on the address during the transaction, and the US bank sent the funds back.

Without notifying my friend, the bank repurchased his US dollars for $1,380,000 and credited the funds to his Jamaican account.

When my friend advised the bank that his supplier overseas had not received the funds, the bank realised their error. Once again, the bank debited $1,570,000 from his account to resend the funds.

No one from the bank called to advise him that the money had been sent back the first time and why. Neither did the management from the bank decide to hold the US$10,000 instead of converting it back to Jamaican dollars since it was their error. Worse, no one from the bank thought twice about the loss accrued to their client’s business due to his suppliers not being paid on time. Instead, they effectively earned $340,000 for a single wire transfer they messed up in the first place.

When my friend complained, and the transaction got their attention, the bank corrected the error eventually. However, the point is that the system was structured to benefit the bank automatically.

When will our banks be regulated to protect us, the consumers?

It used to be that we trusted our bankers. Somehow you felt they were on your side to help build your business, buy your home, and truly get you started in life. It used to be that once you settled on a bank, it was a relationship you were prepared to be in for the long haul. Like your favourite teacher in school, or your spiritual advisor, your bank manager was viewed as the person who was conservative, reserved, and protective of your interests and those of your children.

Back then, bankers made their money primarily from interest rate spreads — the difference between what they paid on deposits and what they charged on loans. Seems those were the good old days. Now, the banks compete against each other to see whose balance sheet looks the best at the end of each financial year. They feel their return on equity and assets should be more in keeping with the big corporations rather than conservative institutions.

Now they have created a host of new sources of income, including a fee structure on which they charge their customers for almost every transaction. It’s not enough to deposit your money with them; if you wish to do anything with your own money, they charge you.

In some banks, the total fee income can exceed the net interest margin.

As I said once in this space, this practice is madness and analogous to a restaurant charging you a fee just to enter and sit down to make the order and then charging again to eat their food.

The three most heinous practices by our banks are:

(1) their interest rate spread — Jamaica’s is the highest in the Caribbean

(2) their unregulated and unchecked banking fees, and

(3) their ability to digitally debit our accounts and failure to respond when questioned promptly.

But I must add a fourth, the unfair spread they charge customers when buying and selling foreign exchange. Plus, they charge fees to deposit foreign exchange over a certain amount.

Doing business in Jamaica is already tedious and frustrating, with high energy costs and other impeding variables relating to accessing capital. Combine those realities with having to purchase goods from overseas and contending with our commercial banks with the unregulated charges and why would anyone want to do business in Jamaica?

How can any small or micro business succeed in this rapacious commercial banking environment?

The Government boasts that the exchange rate has been stable. Yes, that is true. But why doesn’t the Government ensure that the rate is stable at a fixed percentage when the banks buy and sell foreign exchange?

As consumers, we are protected by competition in most businesses in the marketplace as companies ensure their profit margins are based on how high they mark up their cost of goods to the consumer. Competitors typically limit this mark-up.

In the Jamaican banking sector, this does not exist and, as an oligopoly, the players do whatever they please because they know we cannot keep the money under our mattresses, and many clients do not have the means to open accounts overseas.

As citizens, we feel our safety and health are not priorities based on the violence and state of our public health facilities. The State is also not prioritising our financial well-being based on what they are allowing the banks to get away with.

Jamaica is too much of a frustrating and unfair place to live, work, raise families, and do business. Something has to give.

Lisa Hanna

Lisa Hanna is Member of Parliament for St Ann South Eastern, People’s National Party spokesperson on foreign affairs and foreign trade, and a former Cabinet member.