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Loans a worry for regulators


Loans a worry for regulators

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REGIONAL FINANCIAL REGULATORS are worried about the status of non-performing loans, many linked to collateral taken on real estate, and a decline in service-based economies.

The concern stems from the findings of a just-released report that found that the issues are among the primary risks to the financial system, with a recommendation that they be carefully monitored.

The matters are detailed in the Regional Financial Stability Report launched recently at the Frank Collymore Hall by the CARICOM Central Bank governors.

“We’ve noticed increased incidence of non-performing loans since 2009 with the weakness in the domestic economies,” said Cleviston Haynes, Deputy Governor of the Central Bank of Barbados.

“As you know a lot of our economies are tourism-based, certainly within the services sector, and because of that across the region there has been an increase in the level of non-performing loans, although we’re beginning to see some moderation in non-performing loans across the region.”

As it relates to real estate, Haynes informed those attending the launch, including representatives of the World Bank and the International Monetary Fund, that many loans within the region were collateralised using this avenue.

“If you have an increase in non-performing loans collateralised by real estate and the value of those real estate starts to fall, then it’s possible that financial institutions are not in a position to recover on those loans in a way that one would want.” (WILLCOMM)