The Tribune

By RICARDO WELLS

Tribune Staff Reporter

rwells@tribunemedia.net

WITH rebuilding efforts still underway after Hurricane Matthew, Central Bank Governor John Rolle said he has recognised efforts by commercial banks to relay his institution’s “relaxed” lending criteria to their respective clients.

Detailing the status of lending initiatives throughout the country in the wake of Matthew, Mr Rolle highlighted that clients of commercial banks attempting to finance repair efforts through loans have benefited from some form of a “hurricane relief programme.”

In the weeks since the passage of Matthew, residents have been vocal about the sheer devastation experienced in the wake of the massive category four storm.

There have been calls for financial institutions to do more to allow their clients to obtain financing to assist with repairs.

The National Emergency Management Agency (NEMA) estimates that 100 homes were completely destroyed in Grand Bahama and 50 in North Andros.

Further to that, NEMA reports show 500 homes received major damage in Grand Bahama and roughly another 500 received minor damage on that island.

These figures do not address the scores of homes lost or damaged throughout New Providence, another island hard hit by Matthew.

However, not specifying any commercial institution in particular, Mr Rolle asserted that immediately after the passage of Hurricane Matthew early last month, the Central Bank temporarily relaxed certain lending criteria for commercial banks.

He indicated that the Central Bank pointedly increased the total debt service ratio (TDR) from the usual 40 per cent through 45 per cent range, all the way up to 55 per cent.

TDR is the metric most lenders refer to when determining the borrower’s ability to handle a loan, viewing total family income in comparison to the total amount being spent monthly expenses.

In addition to the increase in the TDR metric, the Central Bank also waived the 15 per cent mandatory equity or down payment required on all personal loans.

Mr Rolle said once the moves were announced, commercial banks throughout the country, with a view of policy changes “implemented some form of hurricane relief programme to assist staff and customers with financing of repairs to property and/or replacement of appliances and furnishings lost from the hurricane.”

He added: “These did not require any direct approval or sanction from the Central Bank.”

According to Mr Rolle, common features of these programmes include a three to six month wavier of interest and/or principal payments on existing loans - inclusive of mortgages; waiver of administrative fees for loans negotiated during a specified period after the hurricane and the refinancing of existing loans up to the lower of either the original amount borrowed or a specified limit - $5,000 to $10,000.

Additionally, customers with total debt service ratio at or under a specified threshold (45 per cent), or within the Central Bank’s temporary relaxed prudential limit, are eligible for unsecured loans up to a pre-determined amount of $10,000 and at a relatively lower interest rate; and extension of overdraft facilities to help customers with meeting the required insurance deductible, where insurance claims were made.

However, Mr Rolle indicated that some banks may subject borrowers to other terms and conditions in order for them to qualify for such accommodations.

According to Prime Minister Perry Christie, the damage caused by Matthew are estimated at $600m.

Last month, the government moved a resolution in Parliament to allow for the acquisition of $150m loan to aid in rebuilding efforts.