National Bank of Belize is unveiled and reveals a super low interest rate

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The National Bank of Belize Limited, which is seeking to revolutionize banking in Belize, opened its doors on Monday in the Capital City of Belmopan. The bank intends to provide an affordable credit system to lower and middle income Belizeans – particularly public officers, teachers and then eventually to other needy candidates. While talks circulated around a 6.5 percent interest rate, today the Prime Minister unveiled an unprecedented interest rate of 5.5% which will be granted to borrowers, given of course, that they meet lending criteria. The Rt. Hon. Dean Barrow, in the ceremony’s keynote address, gave a rundown of the institution’s features and policies.

Prime Minister Dean Barrow:

vlcsnap-2013-09-03-07h40m02s207Ladies and gentlemen, the Bank is starting with 20 million dollars in capital, all of which is contributed by the Government of Belize.  I have made no secret of the fact that we have sourced that equity from the Petrocaribe Loan Funds. With the twenty million dollar capital contribution, the bank will, as you have heard, at the beginning operate solely as a mortgage financing institution and its exclusive home construction loan portfolio will cater in equal proportions to public officers and teachers on one hand and then to the larger public.  Loans will be for a maximum of one hundred thousand dollars and this is for first time home owners, so there will be no refinancing of existing loans held with other institutions. For those that we will be servicing, our lending rates will be unbeatable, because our bottom line is people and not profit. That is why our introductory offer to the people of Belize is an unbelievably low five point five percent.

Taking into consideration the international environment of lending rates, says PM Barrow, Government believed that it was high time they introduce a nationalized financing body.

Prime Minister Dean Barrow:

vlcsnap-2013-09-03-08h08m01s1I have long complained that in an international environment of all time low lending rates, the inability of our commercial banks to seriously bring down the cost of money to consumers, is a scandal. I have been given all sorts of reasons  why those in control of the levers of our financial system have failed so significantly. The high non-performing loan ration is blamed, as is the large numbers of existing borrowings with extended maturities that make it impossible to restructure on more favourable terms, and the chief culprit is said to be the general inefficiency in the modus operandi of the commercial banks. Well, all I and Cabinet know is that it is a situation that we could not any longer countenance. It is unacceptable that the spread between bank deposit rates and bank lending rates keeps winding in favor of the banks. In this regard, this government refuses a minute more to be the dog that only barks. And so enter the National Bank.  Now it is no coincidence that as soon as we announced we’d be doing this, and starting with home loans, the commercial banks moved immediately to lower their interest rates on mortgages. So even in that small initial space that we occupy, the competition that we represent has already benefited the consumer.

The idea of a state-owned bank sounds ideal, but some argue that it leaves the window open for political cronies to treat the institution as some sort of “grab tub”. Following Monday morning’s inauguration ceremony, the media pressed the PM on that possibility.

Prime Minister Dean Barrow:

I don’t care what anybody says, look at our record of reform.  We don’t do things in the old-fashioned way.  The Board of Directors is comprised of all good men and women and true, including the President of the NTUCB.  So there would be a ready-made whistle-blower, if ever things were to even appear to be going [astray].  But they won’t go [astray] as long as I am at the helm, and as long as Minister Grant is chair of that Board.  What can go wrong is if people feel as they can borrow and not repay, but I’m confident that the message will get over.

While the bank only accommodates for mortgage lending, the Government intends to eventually establish full banking services; including deposit taking and credit card offerings. The Prime Minister says that GOB is anticipating an out-sized initial demand for mortgage lending and so he plans to petition for additional equity in the national bank before Christmas. The Board of the National Bank of Belize is Chaired by Senator the Hon. Joy Grant. The remaining members of the Board of Directors include Vice Chairman Marion Palacio, Managing Director Jose Marin, Petrocaribe’s John Mencillas and Directors Dylan Reneau and Hector Sabido.

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