Alastair Bryce: “The banking sector is certainly not risk-averse”

The task force report on unfair terms and conditions in the banking sector has painted a less than rosy picture of banking in Mauritius. Mauritius Bankers Association Chairman Alastair Bryce reflects on these concerns and shares his views on the strengths and limitations of the sector.

BUSINESSMAG.The report of the BoM task force on unfair terms and conditions has been rather critical towards the banking sector. Were banks given the opportunity to give their views during consultations?

To put the report in its context, the consultation period was around two years. There was some initial consultation with the banks at the beginning but in terms of working together through the process of the task force, that did not happen.

Banks were not aware of the content of the report until it was published. As we now move into the next phase, we will start to go through it in detail now.

You talk about it being critical towards the banks; well I think it was made clear through the process that it was going to be critical. The title of the task force’s work was somewhat prejudicial. It was a task force on unfair terms and conditions in the banking sector and not a task force to examine terms and conditions in the ban-king sector.

A combination of that and the self-selecting nature of the res-pondents probably meant that that it was going to come out like that at the end anyway. So what we are doing now, not at the MBA but at individual level, is that we are going through the recommendations being made.

We expect that these have been made on the basis of our robust and our statistically significant response and not one disaffected customer. We also want to ensure that on an individual bank level that any feedback is verified with the banks, just to make sure that the person in question is in fact a customer of bank A or bank B. Thus, there is quite a lot of work that we will be doing to verify the legitimacy of the recommendations, to ensure that they are based on proper research. We can also say that much of what’s in the report is not particularly controversial.

BUSINESSMAG.There has been quite some talk about the excess of liquidity in the banking system. It has been pointed out that one of the reasons for this is banks’ aversion to risks. What is your take on this?

We are certainly not averse to risks in the banking sector. We are in the business of taking risks. We would certainly rather be loo-king for opportunities for profitable lending rather than holding high Cost Income Ratios or bidding for government bonds. So, it is certainly not because banks are risks-averse and would rather hold government bonds. I think it benefits everyone when banks have access to profitable lending opportunities.

However, that has to happen within a framework of a proper risk appetite which delivers proper returns in order to support the capital that we need to hold to support those risks.

We are entrusted by our shareholders with capital and they want to see a return on that. They don’t want to take risks; otherwise they will be looking at different industries...

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