Open Letter to the Prime Minister – The Simmering Mortgage Crisis

Submitted by Heather Cole

Dear Sir,

Re: Emergency Request – The Mortgage Crisis in Barbados

There is a very disturbing ad in today’s Sunday Sun of July 2nd, 2017. The Republic Bank has listed for Sale by tender no less than 17 properties in Barbados. It may perhaps be the tip of the iceberg as the meltdown of the mortgage crisis starts to manifest itself.

It is the dream of every Barbadian to own a piece of the rock and to build a home. It represents more to the average Barbadian than the right to vote. It means a fixed place of abode, forever removing the stigma associated with the chattel house which rested on land that they did not own and could be removed at the owner’s pleasure.

That dream seems to be swiftly vanishing. One would have thought that the novelty of social mobility from the chattel house to a permanent fixture would have come with some merits that would foster protection by government.

While government can squarely be blamed for digging the pit for the homeowners to fall into as it has not provided them with the necessary legislation for their assistance, the banks are also to blame. They appear to be a willing accomplice to government’s action, comparable to pulling the trigger of a loaded gun to ensure that the homeowners do not escape the fate of death and subsequently fall into the pit.

The commercial banks in Barbados are sitting on over $15 Billion dollars. They will not topple over and die. No bank has a need for a place to rest its head at night or food to eat. It is significant to note that it is the preference of the commercial banks to foreclose on Barbadians and then sell the debt at a % of what is owed. This has an effect on the landscape; there are many unoccupied houses that will become vandalised and overgrown with bush as the banks are unable to sell. For Barbadians it is not a sellers’ market or a buyers’ Market.

There is not enough money in circulation.

What should also have us all worried is that this debt will be bought by foreign entities taking the land away from the persons whose navel strings are buried on the island. The people who live in Syria and Saudi Arabia should not be owners of land in Barbados.

As the mortgage crisis is now in full swing, I thought it best to read up on CAP 236 to find out what relief was written into that section of the Laws of Barbados to offer relief to Barbadians.

I was left in shock. Not only does the law not offer any relief or protection to the mortgagor, it appears to have been written in favour of the lending company. After 50 years of independence and the creation of a vibrant middle class, one would have at least thought that by now the laws would be on the people’s side.

There are no identified rights for the mortgagor. The law offers no protection to the investment of the homeowner and that is wrong. All of the covenants are in dire need of revision. S113 states that it is the duty of the mortgagor to act in good faith and have regard for the mortgagee. There is however no reciprocal statement that the mortgagee should also act in like manner to the mortgagor.

If Barbados truly is a nation of Laws, the laws must reflect the social, political and economic well being of all of its people; not for one class and against another; not for the rich and against the poor; not for the companies and against the consumers; not for the banks and against their customers.

In essence this Act as it relates to mortgages is socially unjust. Perhaps it has never been challenged and the time is now ripe to challenge if they do not provide equitable solutions to the mortgage crisis that the island is now facing.

Presently, government can offer some relief based on the Act. It has the authority to change interest and set rates. However, one hopes that government understands that this is a crisis and a crisis that will not only affect middle class housing but will have an effect on every social and economic situation on the island. Whether rich or poor when families are stable, communities thrive. Societies with vibrant middle classes always thrive. Refusing to act now will put the entire Barbadian middle class at risk of survival and reopening an avenue to drive the country back into a time when only the very rich and the poor existed.

In my opinion, it is in the best interest of the people for government to:

  1. Have the courts enforce an emergency stay on those 17 properties that the Republic Bank has advertised for sale on July 7th, 2017.
  2. Have the courts enforce an emergency stay on any property that has already been offered or advertised for sale by any commercial bank or financial institution registered to conduct business in Barbados.
  3. Set a moratorium on the sale of properties mortgaged by the commercial banks or financial institutions registered to conduct business in Barbados until such time as a national solution to this crisis has been devised.

I am offering my assistance to help create an equitable solution to this crisis. I await your urgent response.

Sincerely,

Heather Cole

cc: The Leader of the Opposition

Barbados National Bank Officially Dead

BNB Logo

BNB Logo

Republic Bank (RBL) recently rebranded Barbados National Bank (BNB) with the Republic Bank blue. It pained many Barbadians to witness WE bank sold to “others” and it pained further when the BNB brand was dismantled and replaced with RBL’s. If it WAS any consolation, central government and the NIS owned a minority shareholding which gave hope that the holding may have served as an avenue to reclaim the bank at some point in the future. Sad to say, wishful thinking!

The recent offer by RBL to purchase minority shares was successful. According to 187 of the Companies Act because 90% of the offer was taken up, it gives RBL the right to acquire ALL dissenting shares.

The letter attached dated 17 December 2012 confirms RBL’s intention to invoke that right pursuant to the Companies Act. By the end of the year RBL in all likelihood become the100% owner of the former BNB.

Here endeth a national symbol.

Notice to Dissenting RBL Shareholders:

Letter one, two and three.

National Insurance Board Wants Equity Stake In Republic Bank Trinidad

Dr. Justin Robinson, Chairman of National Insurance Board

“In light of this, Dr. Robinson indicated that, “The NIS is looking at all of the options right now. The options are that the NIS could decide not to sell any of the shares it has, it could sell some or it could consider an exchange of BNB shares for Republic Bank shares.”

The Barbados Advocate

BU wishes to commend the Board of the NIS Scheme for stating a coherent position regarding the options under consideration regarding Republic Bank’s offer of $5.00 to buyout minority shares. If Republic Bank is successful it means the Trinidad owned bank would 100% own the former national bank of Barbados.

Chairman of the NIS Dr. Justin Robinson is on record confirming that the NIS Fund is cash rich and the Republic Bank is on record it wants ALL of the shares. The two stated positions make the third option favoured by Dr. Robinson the most sensible investment strategy for the NIS and Barbados.  Why should we not seek out an equity stake in one of Port of Spain’s leading companies? T&T capital has acquired many Bajan companies. It is time to confront the hegemony of Trinidad.

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Notes From a Native Son: Are Cross-border Banks Giving Barbadians Good Service?

Hal Austin

Introduction:
Republic Bank, in a brave move, has announced its intention of taking the former Barbados National Bank in to wholly-owned control. The announcement has led to a muted discussion among some Barbadians, with the professor of economics at Cave Hill, Michael Howard, ‘advising’ local shareholders to sell to the foreign owners.

Apart from the principle of clean hands, the professor’s advice, which also includes keeping the local subsidiary out of the hands of the government, appears to lack any real understanding of banking and its role in intermediation and, even more, economic growth. It is silly advice and should be ignored. Of course, there is no doubt that Republic Bank has behaved impeccably in its dealings both with the Barbados Stock Exchange and investors, but with other unscrupulous operators there is every opportunity in such a move to undermine shareholder value. Is the acquisition going to create value? What about cultural differences, or are they saying Barbadians and Trinidadians share a common culture? What stress and prudence tests have been applied? Retailing banking has reached such a comfortable state in the Caribbean that it is difficult to find common performance measures of success.

We know, for example, that customer satisfaction is not a measure shared by the former BNB, since Republic Bank neither formally informed all its account holders when it took control of the bank, when it changed its name, nor of its intention to buy out minority shareholders. In simple terms, it could not give a hoot what Barbadian shareholders think about their management style.

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Notes From a Native Son: Bank Regulation is Serious Business, Not Child’s Play

Hal Austin

Introduction:
At a time when banks in Europe, the US, Japan and Britain are imploding and every jurisdiction is enforcing legal requirements on financial institutions, the authorities in Barbados have come up with a wonderful idea of a voluntary code – see Feedback Invited On Draft Banking Code Of Conduct. It is interesting that many of the features of this draft code are similar to those of the now abandoned British banking code, which too was voluntary until November 2009.

Paragraph 2.4 of the draft is of no use for a large number of people in Barbados who do not have access to the internet.

Paragraph 3.2, on unfair contract terms should be a legal requirement, not a voluntary one. The second section of the above paragraph reads: “Financial institutions will also ensure that employees and agents who are authorised to give advice on the financial services offered are properly trained to competently, knowledgeably, efficiently and accurately render such service.” These basic requirements should be legally compulsory on every count. First, agents and employees are working on behalf of the financial institution, not of the customer, and in the case of the agent the form of remuneration is just as important. If s/he is being remunerated by commission, then the sale is more important than advising the customer on his or her consumer rights or even if the product is the right one for them.

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Barbados Government Maybe Selling Barbados National Bank Shares Below Premium

Tony Hoyos

Mr. Minister [Chris Sinckler], as individuals own less than 10% of the BNB shares, you are negotiating for all of us on this occasion.  Please do not sellout the Barbadians that have small shareholdings.  There is no reason why you should not seek the best price for the Government and people of Barbados.  At a minimum, seek competitive bids from other entities.  We look forward to your support, in what is your first major action that will impact us.  Thanking you in advance – A. Freeman

 

The resignation of Tony Hoyos from the Board of Directors of the Barbados National Bank (BNB) should should concern Barbadians. Hoyos’ letter of resignation was posted on Peter Boyce’s Facebook Page earlier today.

A full page statement was posted in the local press today by Republic Bank (BNB’s parent company) signalling it will be making an offer to buyout the remaining shareholders in BNB. An article also appeared in the Trinidad press yesterday. Currently Republic Bank Limited (RBL) owns 65.13% of BNB, the government of Barbados 28% and individuals 7% round out the ownership.

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What Buy What BNB What?!?

Submitted by Bush Tea

barbadosnationalbankOK, I admit that Bush Tea is a freak that suffers from strange brain waves and, like some living at a certain place in Black Rock, cannot be relied on to have rational opinions. But cud dear, even in such a state Bush Tea is challenged to understand why we would want to buy back the BNB.

Admittedly, we should never have sold it in the first place. But having sold the thing – and it seems like the buyers were happy, we were happy, everybody was happy – now I am hearing all sorts of big-up bright people talking about finding hundreds of millions of dollars to buy it back?!?

WHAT THE  ????!!!

A fool and his money are soon parted. Here we have a small country that produces NOTHING. Have no natural resources. Facing difficulties ahead – and from the Prime Minister back talking about spending precious money buying something like BNB???

These people really ‘outside’ the fence at Black Rock?

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