Restructure expenses, says career banker

FOR THE last several months, Jamaica has been caught in the financial tsunami that has claimed whole industries, sent thousands on the unemployment line and forced people everywhere to pinch pennies. Households have cut the supermarket and utility bills. But while you have some amount of control over how much you spend on food and some other expenses, there is little you can do about loan payments. Right?

Wrong, says Scotiabank’s Executive Vice-president Wayne Powell. “We recognise that customers are having a tough time, so we decided that we needed to do something special, something different, something novel. We came up with what we call the Customer Assistance Programme (CAP),” Powell tells The Gleaner.

Scotiabank called thousands of their customers and sought first of all to ascertain what kind of situation they were facing. Then the bank decided what level of assistance they needed. Powell says good customers who were facing short-term problems received advice and a little reprieve.

“Do some restructuring of your expenses, we told them. Credit-card expenses can be very dangerous, so we advised them to use their credit cards for convenience rather than as a loan,” Powell relates. “There was also something for those persons who had immediate needs they couldn’t pay for. We waived one payment, sometimes payments for up to three months to allow customers to pay their children’s school fees. For credit-card payments, we may say skip a payment, which we do very frequently. And that helps out in the short term,” the banker adds.

Long-term fix

If customers are facing tougher challenges and need a long-term fix, Powell says CAP also provides options.

“We look at consolidating your debts – credit cards and other retail loans. For example, if you had a loan for five years, we may suggest you extend it to 15 years because the primary thing is to help you increase your cash flow. We have seen where, by restructuring a loan from five to 10 or 15 years, people cut their monthly payments by as much as $200,000,” he discloses.

But apart from relaxing some rules on loans, the Scotiabank’s vice-president points to other opportunities for customers, especially in the small-business sector.

A joint initiative

“The Micro Enterprise Finance Limited – a joint initiative involving Scotia, the Canadian International Development Agency and the Kingston Restoration Company – offers people at different levels who are not employed and who have good ideas, a chance to get small loans for distribution or whatever purpose they choose. That has been going very well,” states Powell.

He says many people who have lost their jobs have been coming in with ideas.

Powell also points to little-known options like using your credit cards to earn benefits.

“If you lodge your salary to your credit card every month and pay what you use, you pay no interest. But there’s also the Rewards Programme. While you are spending for breakfast, lunch and grocery, you could be earning miles on our American Airlines Card. There are actually Scotia customers who travel every year free of cost!”

Stacy-Ann Smith, Gleaner Writer