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Non-performing Turks and Caicos government loans sold to specialist debt recovery firm
Published on September 12, 2012 Email To Friend    Print Version

PROVIDENCIALES, Turks and Caicos Islands -- Eighty non-performing Turks and Caicos Investment Agency (TC Invest) loans have been sold to a specialist debt management company by the Turks and Caicos Islands (TCI) government it was announced on Tuesday.

The Outstanding Loan Company Limited (TOLCO) will shortly begin to issue communications to the loan holders and begin the debt restructuring process in earnest.

This sale is separate from the transfers of ‘performing’ loans out of government management currently being processed by the commercial banks. This work started in May 2012 and is planned to complete by the end of September 2012, when TC Invest will finish winding up its activities.

Money raised from this sale will be used by the government to pay off its debts related to the original financing of these loans and held by the Caribbean Development Bank, European Investment Bank and National Insurance Board. It will also remove these as contingent liabilities on the public sector and put the government in a stronger position when negotiations have to be started on replacing the loan guarantee by Britain in advance of is expiry in 2016.

TC Invest was wound up by the TCI government due to the uncertain nature of its liabilities to non-performing loans, and a desire to better manage its relationships with inward investors through the CEO’s office. After the election this arrangement will continue as one of the roles of the deputy governor. The government also announced earlier this year inward investment, business licensing and small business support would be brought back into the heart of government.

“Unfortunately, over time TC Invest became a multi-million dollar financial liability and become no longer able to achieve what it was set up to do – support business development here in the TCI,” said Philip Rushbrook, of the Governor’s Office. “Most of its loans were to private individuals for non-business related borrowing and its portfolio did not have enough well performing loans to repay back the debts to the international banks. Further, at a time when financial prudence is required to restore the Islands’ public finances it was not realistic to expect the government to be exposed to further and growing financial risk. Governments should not be in the lending business – that is what banks are for.”

TOLCO is a specialist mortgage and loan stabilization group operating within the Caribbean Community (CARICOM) and other Caribbean countries.

Spokesman Kelvin Latta of TOLCO said, “We will use our experience to work with clients to reschedule and stabilize as many loans as possible. In those cases where this is not possible then the foreclosure process will be a measure of last resort.”

This expansion of TOLCO's portfolio will form the basis for increased participation in securitized lending and loan management in Turks and Caicos and elsewhere in the Caribbean.

Latta added: "It has been refreshing to work with both TC Invest and TCIG representatives in the stabilization plan for both non-performing and performing loans and to be able to offer a range of options to improve the active collection of outstanding loan repayments. We share the common belief that loan origination and management belongs in the hands of private industry and is not a good use of precious government tax revenues.”
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