A consumer body is warning of the demise of Barbados’ smallest cooperatives as the $3 billion credit union movement nears the end of a long wait for deposit insurance.
Barbados Consumer Empowerment Network (BCEN) is worried that the qualifying criteria which the Barbados Co-operative & Credit Union League Ltd recently communicated to its affiliates, including three consecutive years of profits, “could unintentionally disadvantage smaller community-based co-operatives”.
“The deposit insurance is not the issue. In principle, it can protect savers against institutional failure. The danger lies in how it was introduced and who was involved in selling the idea to a small developing country like Barbados where small co-operatives exist to assist smaller groups looking to maintain their families’ upkeep,” BCEN executive director Maureen Holder said.
“While BCEN welcomes the progress toward deposit protection for credit union members, BCEN remains deeply troubled by the unintended consequences as aspects of the new qualifying framework could unintentionally disadvantage
smaller community-based co-operatives.”
Holder said her understanding was that ten of the small credit unions “have been impacted so far”.
The league was asked for a response to the concerns raised, but deferred comment.
There are 25 credit unions licensed and regulated by the Financial Services Commission (FSC), down from 33 in 2018. By June, according to FSC data, members had regular, term and other deposits totalling $2.56 billion.
In September 19, 2025 correspondence attributed to its general manager Tracia Pounder, the league gave a deposit insurance update following meetings with the Ministry of Finance, Barbados Deposit Insurance Corporation (BDIC) and the Financial Services Commission.
“The FSC has completed the qualifying criteria for credit unions. The assessment framework is anchored on three core financial indicators, selected for their critical importance to the long-term sustainability of credit unions and deposit protection,” Pounder said.
Those indicators were capital adequacy, profitability and liquidity criteria, specifically, a minimum non-risk weighted Tier 1 capital of four per cent, consistent with international prudential standards; positive net income demonstrated for the past three consecutive financial years (2023 to 2025); and a minimum liquidity ratio of eight per cent of total deposits.
Based on these conditions, credit unions will be categorised as eligible, conditional and requiring remediation, or ineligible.
“The insured deposit amount, originally discussed at $25 000, will be adjusted to achieve the 95 per cent coverage target. This will be supported by a built-in legislative mechanism to ensure the insured amount automatically adjusts in line with this target, so future amendments to the [Deposit Insurance] Act will not be needed,” Pounder noted.
“The BDIC is in the advanced stages to repeal and replace their legislation, to accommodate credit unions, with an implementation goal of year-end to early next year.
“Looking ahead, training and onboarding with BDIC is expected in the first quarter of next year, pending completion of the remediation exercise.”
However, Holder maintained, that deposit insurance was meant to protect members, not to exclude their institutions.
“If the criteria are too rigid or skewed toward commercialstyle financial indicators, smaller credit unions may find themselves pushed into conditional or ineligible categories, effectively sidelining them from the very protection their members need most.
“Tying eligibility to three consecutive years of profitability could penalise credit unions still recovering from economic shocks, inflationary pressures or social lending commitments that prioritise member welfare over short-term returns,” she said.
‘Not banks’
“Credit unions are not commercial banks and their mission is to serve their members, not to maximise profit. Regulators must recognise this distinction to avoid driving consolidation or closure of smaller, rural or working-class cooperatives.”
In March, the 25 credit unions had total assets of $3.32 billion and 250 411 members. Some people are members of more than one credit union.
Most were at the big three – Barbados Public Workers Cooperative Credit Union, City of Bridgetown Credit Union and Affinity Plus Credit Union – which together had 222 736 members and total assets of $2.74 billion at the end of March.
Some small credit unions, facing increased regulatory requirements and operational costs, including for cybersecurity and digitisation, have merged with bigger counterparts, or stopped operating.
Holder called for greater transparency on how deposit insurance coverage levels “will be determined and how remediation support will be extended to conditionally qualified institutions”.
She added: “As Barbados moves toward the longawaited inclusion of credit unions in the national deposit insurance scheme, BCEN urges policymakers to ensure that financial protection does not come at the expense of financial inclusion.
“Members of small financial co-operatives and credit unions across Barbados are strongly encouraged to keep abreast of these developments, as the outcomes will have direct implications for their savings, membership security and the future structure of the local credit union movement.” (SC)
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