2 Banks in Belize under Enhanced Supervision

Kareem Michael

Earlier, you heard about the enhanced supervision that took place at the Saint Francis Xavier Credit Union in Corozal, ahead of an administrator being appointed. It is a last resort taken by the Registrar of Credit Unions in an effort to save the embattled financial institution.  A recent report from the International Monetary Fund cites two banks in Belize that are also under enhanced supervision.  This, we are told, is due to underperformance of loans and “risky lending practices.”  News Five asked Central Bank Governor Kareem Michael what this means for those banks. Of note is that the Belize Bank Limited is one of the highest credit-rated banks in the country and late last year, the Caribbean Information and Credit Rating Services Limited (CariCRIS) reaffirmed the bank’s near-excellent national rating.

Kareem Michael, Governor, Central Bank of Belize

“The central banks watch over the financial system doesn’t wane; it doesn’t go through peaks and valleys. It is one which is constant. We understand the huge responsibility placed on us and in that in a very small financial system, you only have very limited options to put your money. The Central Bank then must remain vigilant at all times in the financial system. Enhanced supervision is a fancier word for when the Central Bank has its rotation and does something different. So we have both offsite and onsite examination. Offsite is when we sit behind our desk and we look at reports. Onsite is when we go in there and we dig and we turn over files and we look under the rug and in closet, so most banks go through that sort of assessment by the Central Bank. So it might be a perception that when you see Central Bank examiners within the financial institution that there is reason for panic. No, I would say that it is part of our regular vigilance, oversight over the financial system. In a small open economy, I think risk is any and everywhere. If you certainly want to, if you lend for development in Belize, it is bound to take on a certain level of risk and it is just the dynamics of our market. Now the Central Bank is here to ensure that you don’t take your risk too far, so we prescribe, let’s have a good credit risk policy in place. Let’s ensure that you have the proper checks and balances, that your governance is good so if you decide to take on this risk that you make sure that you have accounted for all the eventual things that may come with it.”