CID bank loans up by 35%

| 01/03/2011

(CNS): The Cayman Islands Development Bank increased its lending during 2010 by some 35%, the premier revealed recently. The increase is due to a demand for affordable loans and assistance given to Caymanians experiencing serious difficulties with both personal and business finances. In the special financial stimulus programme backed by government the bank loaned just over $4.2 million to 56 customers to help avoid mortgage foreclosures, catch up on arrears, consolidate other debts and for small business financing. The premier said the gravity of debt issues facing residents was apparent from the take up of debt counselling services offered by the bank.

As of 31 January, the CIDB had a loan portfolio of over $40.7 million compared to just over $30 milllion at the financial year end of 30 June 2009, representing a 35% increase, McKeeva Bush told his colleagues in the Legislative Assembly last week. The bank, he said, was continuing to try and raise more financing at affordable rates in order to assist more people and had also restructured its own debt, reducing the interest the bank pays by $800,000 per year.

“Since the stimulus program the bank continues to increase its reach to families, small businesses and students,” Bush told the House. “This increase has been made possible through additional borrowings which were supported by the government. This included two bonds of US $5milllion each.”

The bank gave out seven loans totalling $1.4 million to prevent  foreclosures on people’s homes, nearly $2 million was loaned out for for 29 different debt consolidations, six loans were given for arrears regularisation and 14 small business loans were given, totalling $824,143.

The bank, he added, is actively reviewing all existing loan files to examine ways to reduce the loan delinquencies and to devise restructuring solutions to assist customers where possible. Bush said the bank had been instrumental in assisting those in need during the past 18 months.

“The CIDB has undertaken a rigorous process of reviewing its existing loan portfolio with a view to strengthening its financial position as well as to provide assistance to its clients wherever restructuring of their loans is possible,” he stated. “All of this has been achieved while lowering its cost of funding through refinancing to take advantage of market conditions and maintain low operating costs.”

He congratulated Paul Byles, the bank board’s chairman, for what he said was his “very hard work” in stabilising and strengthening the bank.

The CIDB is a statutory authority owned by the government. It was established in 2002 to raise and provide financing for the economic development of the country. Its role is to supplement the activities of the local commercial banks by lending to small businesses, the housing sector and human resource development.

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  1. Missed it... says:

     I just called for a debt consolidation loan and apparently they are only offering student loans.

    dang it… I just missed out getting a piece of that 2 mil to consolidate my debt. bummer.

    • Anonymous says:

      Try telling them that you need a student loan to study debt consolidation at the school of hard knocks.

    • Anonymous says:

      This all a pile of propaganda. Back in 2008 I tried to apply for a loan for just USD$15,000.00 to help with my bank rent and was told I did not qualify. Now I had invested over USD$150,000.00 thousand of my own money and never owed a cent to the bank.I ended up having to sell it at a great loss
      and then what apply to CID to get a new looan for start up again maybe? Which made more buisness sense : to apply for the smaller amount and pay it back and protect my savings that I worked for for 15 years…No they didn’t see it that way. This si all a farse and fairly tail bullshit!! Cayman Is no longer for its own Caymanians…

  2. anonymous says:

    11:22, you are quoting from something dated 2002 and trying to apply that to 2011? is there any chance that somewhere in between the CIDB has increased its limit for mortgages? and what about the housing board..dont they provide these low income mortages now?

  3. dj says:

    I give props to the CIDB for helping the little man out with financing. my older brother is a fisherman and he got small loan to get new boat engine. he paid all of it back in 12 months. he could not get the same loan from 3 other banks.

    • Anonymous says:

      That is precisely the reason why the bank was created. It was NOT created with the intention of giving political supporters large mortgages at rates lower than what they could get from a bank.

  4. Mike says:

    the truth is that politicians on BOTH sides of the house are always trying to get staff at the bank to do little favours for members of their constituency, so there is nothing unique there. all the board can do is try to minimise that interference. I think the CIDB is doing its best with limited funds and it has to borrow at high rates, although they seem to have got this down a bit now. maybe it should never have been created in the first place, but it does offer a valuable service especially when the retail banks slam the door in your face.

  5. anonymous says:

    dude you got the low income thingwrong. that is the housing trust not CIDB. CIDB is somewhere between the housing trust and the regular banks. meaning it focus more on smaller mortgages but not targetted at the affordable housing ones, although it can also do that. I have a mortage there which was for 250,000 and I got that in 2006.

  6. Anonymous says:

    I too have a bad feeling about this. The taking of “loans” with little true intention to repay has been a device employed by more than influential person here in Cayman in the past. Usually the bank tolerates a certain amount of it because it perceives it is likely to earn favour from the person.

    Here we have the CIDB, a bank designed to help those who cannot get finance from usual sources, making much larger loans to individuals than might reasonably be expected. If the loan is made without adequate security and is not repaid, who pays? The Cayman Islanders of course as it is their money that is being lent. It all points to the big men milking an institution that is there to help the small man. There will be little left for the small man I fear.

    My guess is that the majority of these loans were to local companies rather than individuals. A company can readily be declared bankrupt in CI with little negative impact on the individuals behind it. But I’ll be happy to be proved wrong and that the loans were made to individuals whose liability to repay is not limited.

    Open question to Paul Byles: Have you checked and are you satisfied that the CIDB loans made over the past 18 months have suitable and adequate security?

    • Anonymous says:

      The ownership agreement with the government says for the past years that the CIDB’s goal is to reduce the delinquency ratio to 12%.

      The current delinquency ratio is near 20%.

      So, no they don’t have adequate security.

  7. Anonymous says:

    It’s time for the Auditor General to step in, as I fear the Cayman Islands Development Banks may have been hijacked by politicians, and the money that was ostensibly set aside to assist low-income Caymanians with mortgage financing could have been diverted to political cronies instead.

    The bank gave out seven loans totalling $1.4 million to prevent foreclosures on people’s homes, nearly $2 million was loaned out for 29 different debt consolidations, six loans were given for arrears regularisation and 14 small business loans were given, totalling $824,143.

    Seven loans totaling $1.4 million equates to an average of $200,000 per loan. I will now quote from the Hansards of the Legislative Assembly from the year 2002 when the CIDB was being setup:

    Home Acquisition criteria
    Loans shall be for construction of a house on land owned or lease by the borrower or the purchaser of newly constructed homes. Only first time homeowners can qualify. There must be evidence that the home to be occupied will be used as a residence by the borrower(s) and/or his or her family. The maximum loan size would be the lesser of the following four amounts where applicable:
    1. $95,000
    2. 90 per cent of the market value of a newly constructed house, or
    3. 90 per cent of the combined value of the market, value of the land, plus the cost of the house after construction.
    4. 90 per cent of the improved property.

    The monthly income shall not exceed:
    • Individual $3,000
    • Joint/combined $4,500
    • Repayment terms 20 years
    • Interest rate to be determined by theCIDB based on the cost of funds.
    •Security must be adequate and must be subject to careful appraisal as to value.
    • Insurance must be adequate and relevant.

    Home Improvement
    Home Improvement criterion shall only be for improvement, extension repair or maintenance and retrofitting of a house on land owned by the borrower. The estimated cost of any improvement being re-quested shall not exceed $25,000 or two-thirds of the estimated value of the house or 100 per cent of the cost of improvement.
    Monthly incomes shall not exceed:

    • Anonymous says:

      “It’s time for the Auditor” author needs help understanding the hansard before commenting.
      The inital funds lent to the CIDB came from the Caribbean Development Bank “CDB” and as such the CDB had their own set of qualifying amounts and criteria. The amount borrowed was $5 million which would have been exhausted many years ago.
      Get your facts straight before going to press and talk to the many Caymanians who were rescued by the CIDB when the commercial giants shut the door in their faces.
      Recent borrowings approved unanimously in LA is testimony that all politicians know the importance and role the CIDB plays in the community.

      • Anonymous says:

        You have either misunderstood, or you are deliberately trying to misrepresent the point; that being the maximum amount allowed for loans.

        The CIDB was setup to assist low-income Caymanians to get a loan. If seven people received loans that averaged $200,000 each to prevent foreclosure then they were obviously NOT low-income Caymanians.

        Now if the 7 people who received those loans did so because of the political affiliations rather than genuine need, then there is a case ofdouble injustice because the money is not there now for the 15 needy Caymanians who would have qualified for those same funds under the rules laid down.

        However, the Chairman of the Board probably has some difficulty in understanding how anyone can get by with just $95,000 for a mortgage, since he charged the Premier more than $325,000 just for advice.

        • The missing link says:

           Yup….this is cronyism at it’s BEST!  

          XXXXXX

          This handout mentality has to stop!

          Politicians are getting elected by these favours and it has to STOP.

          My wife and I are both unemployed white collar Caymanians.  Both of our companies downsized and we are out of work.  We are not looking for handouts!  I am angry that every job we apply for is being filled by an ex-pat renewal when we both have overseas experience that is just as good as theirs.

        • anonymous says:

          Please give the political gibberish a rest. The CIDB has provided mortgages up to 200 thousand for years and over time this has been increased to the current limit which is 300 thousand. The National Housing Trust (which is a separate body operating under the Ministry of Community Affairs) provides the type of low income (I.e. 95k) mortgages you refer to. This does not apply to the CIDB. So “mortgages averaging 200k” has always been within the policy of the CIDB.

          • Anonymous says:

            We shall see if this is the policy as I have made a FOI request on Who/When/How the policy was changed.

            The “D” in CIDB stands for “Development” and offering mortgages at rates lower than the retail banks does not support development any more than would giving car loans at 6% interest so our teenagers can affort to purchase a luxury car.

            If you think that a $300,000 mortgage at 6% is the best way to support “development” then I can assure you that there will be a long line of people wanting to refinance their mortgages.

            The CIDB looks more like a slush fund where insiders have been able to send their supporters to be first in line to feed at the trough.

            If you are one of the lucky recipients then your righteous indignation is understandable. Robbing Peter to pay Paul is not the best policy, but you rarely ever hear Paul complain about it.

    • Cicero says:

      Thank you for this detailed account.As I said in my brief comment earlier. I have bad vibes about the CIDB and just hope our current AG takes no prisoners.

  8. Cicero says:

    I have one of those bad feelings here that says there will be a pile of bad debts, especially when I see the word restructuring. Auditor take note!

  9. Anonymous says:

    56 customers owe $4.6 million. As this is our money I think it fair that we know who these customers are. That will prove very interesting reading especially as (according to the marl road) a lot of these loans were given to "preferred customers" before the application process was even available.

  10. Anonymous says:

    First, a thank you to the Cayman Islands Development Bank for helping individuals and small businesses to weather this economic storm.

    Second, this economic storm is a wake up call for everyone in Cayman. Everyone (government, small business and individuals) needs to save for a "rainy day".

    Why? Because Cayman, being a small country that is currently dependant on only two sources of income, is hyper sensitive to economic rainy days.

    So, during the sunny days, save at least 10 to 20 percent of your income. You will need it when the economic storm clouds gather.

    This is a "no brainer".