TT banks loaded with cash

Speaking at the launch of the Intercommercial Trust and Merchant Bank Ltd (ITMBL) at the Courtyard Marriott Hotel at Invaders Bay on Thursday night, the Governor disclosed that TT is currently in the middle of both an energy and a financial boom.

Williams said while many attribute TT’s current economic health (evidenced by 12 years of consecutive economic growth, inflation basically in check and national unemployment at its lowest levels in a decade) to its oil fortunes, "it also has to do with the sound economic policies, of which the liberalisation of the financial sector was a significant part."

Stating that TT has now become a major source of regional financing thanks to Government financial sector reform initiatives, and that local banks have expanded their presence throughout Caricom, Williams said, "This is one which the bankers in the audience never like to hear. (Local) Banks are recording phenomenal profits with an average return on assets in the vicinity of 3.5 percent." The Governor said additional evidence of the robustness of the local banking system can be seen in the fact that banks are more than adequately capitalised (with a capital ratio averaging 20 percent, well above the statutory eight percent minimum), non-performing loans for the banking system down to two percent and provisions at a reassuringly high level with a coverage ratio relative to non-performing loans exceeding 61 percent.

Williams also said the launch of the ITMBL was timely given TT’s burgeoning capital market which is now rivalling the traditional banking sector "as a preferred source of business financing."

"Over the last five years, the value of sovereign bond placements in TT has amounted to more than $16 billion while private debt issues have amounted to $10.5 billion over the (same) period.

Also with the rapid diversification of the economy, trade and project financing, commercial paper and various forms of structured finance typical of merchant banks, now are increasingly becoming important sources of funding business activity," he stated.

Williams said the Central Bank continues to address challenges facing merchant banking in TT and other issues through ongoing financial sector reform initiatives. He also said that the proliferation of cross-border ownership in the Caricom region has resulted in local banks spreading their wings abroad, the acquisition of ITMBL’s parent company Intercom-mercial Bank (IBL) by Jamaica Money Market Brokers (JMMB) "reflected a reversal of the dominant order."

Williams said IBL’s formation, after the liquidation of three local banks, reflected IBL’s founders "confidence in the economy and in the financial sector of TT." ITMBL’s new Port-of-Spain office will be located in the Furness Building, Independence Square.