The government is moving to introduce a new bankruptcy and insolvency framework later this year, in a bid to reinforce Barbados’ financial system and safeguard depositors, Minister of Finance Ryan Straughn told the Senate on Wednesday.
The move signals a broader push to modernise financial regulation as credit unions expand rapidly and assume greater systemic importance.
As the upper legislature debated the Protection of Depositors Bill, the finance minister said it was one element of a package of financial reforms designed to protect depositors, bolster confidence in the banking system and support the continued growth of the credit union movement.
He explained that the forthcoming bankruptcy legislation would complement the new deposit protection regime by providing a clearer process for dealing with failed financial institutions.
“We are currently also working on a new bankruptcy and insolvency framework,” Straughn said, noting that where an institution fails, the Barbados Deposit Insurance Corporation (BDIC) would act as liquidator under strict regulatory oversight. He said the arrangement would allow assets to be disposed of quickly “to ensure that all appropriate creditors, shareholders can be resolved as quickly as possible.”
“These reforms are critical for there to be greater confidence in the financial system,” he added.
The Protection of Depositors Bill is intended to provide greater security for families, small businesses and the more than 200 000 Barbadians who are members of credit unions, said Straughn. The bill would bring credit union deposits under state insurance protections on par with banks for the first time.
He continued: “What this bill is intended to do is to further support families in this country… who deposit their monies in credit unions,” he said. “This bill… will usher in a new level of protection that will be provided for thousands of Barbadians across the country.”
Highlighting the rapid expansion of credit unions, Straughn noted that their assets had grown from $403m in 2007 to just under $3bn by the end of 2025 — nearly a sevenfold increase.
“To the extent that we now need to ensure that the financial system… is strengthened, this level of protection is there,” he said, adding that the legislation responds to years of advocacy by the Barbados Co-operative and Credit Union League.
The finance minister also pointed out that two credit unions have become systemically important institutions because of their size, in an apparent reference to the Barbados Public Workers and City of Bridgetown credit unions.
“One of them specifically is even larger than the smallest bank,” he said, adding that one credit union already owns a deposit-taking institution protected under the existing framework, while the parent institution itself is not. “We are here to ensure the right-sized level of protection within the deposit-taking institutions in Barbados.”
While the existing deposit insurance scheme, introduced in 2007, covers bank deposits of up to $25 000, the new legislation would extend that protection to credit union members.
He noted that internationally, deposit insurance systems generally aim to fully protect about 95 per cent of deposit accounts.
Although the $25 000 limit would remain unchanged, Straughn said the threshold is expected to cover approximately 91 per cent of all eligible accounts because most depositors hold balances below that amount.
“If you happen to have $5m in your account, you’re only covered up to $25 000. If you have $19 000 you will get $19 000 back, because you’re covered for $19 000.”
(SB)
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