A better deal for taxpayers and lower payments for loan holders are the main benefits of the Turks and Caicos Island Government’s decision to restructure TCInvest it was announced today, Friday, 25 May 2012.
First Caribbean Bank, Royal Bank of Canada and Scotiabank will each take on a share of the TCInvest loan book in a deal that will net around $11m for the TCI taxpayer.
The 240 loans in the deal will potentially save loan holders thousands of dollars thanks to the lower rates of interest offered by the private banks rather than those of the former statutory body.
TCInvest charge an interest rate of between 6.5% and 12% on loans. The new bank rates for the same loans will be charged at rates between 4.75% and 9%.
Someone with a $100,000 mortgage will be at least $200 a month better off under their new terms at the banks. Over a typical 20 year loan term this would save the mortgage holder in the region of $50,000.
TCIG has negotiated terms with the three banks that mean the banks will pay up to 50% of all the associated fees of transferring mortgages, for example, such as legal fees and loan processing charges. TCIG will waive any stamp duty, penalties and fund any residual costs associated with transferring the loans. Those individuals with more than one loan will be offered the opportunity to consolidate their loans into one arrangement to secure better terms. The Banks will begin the process of contacting these clients in the very near future.
There are also 85 non-performing loans, with a face value of $6m; TCIG is currently looking at two options to address this portion of the portfolio and negotiations are still being concluded.
The money raised from this process will be used by the Government to pay off TCInvest’s debt with the Caribbean Development Bank, European Investment Bank and National Insurance Board, which is guaranteed by the Government. This will allow TCIG to enter into negotiations in 2016 regarding refinancing its remaining national debt in a stronger position.
“This announcement emphasises why Government had to take action over TCInvest,” said Patrick Boyle, Chief Executive, TCI Government. “Due to the unclear way that TCInvest historically issued its loans in the first place, we simply had no clear idea what our financial liabilities would be.”
“We have taken this affirmative action, therefore, to create the best possible deal in the circumstances for the taxpayer, and one that reduces significantly the monthly bills for those holding these loans.”
