Log In

Reset Password

Bank bosses say they want to lend

First Prev 1 2 3 Next Last
Butterfield Bank CEO Brendan McDonagh

Bermuda’s banks are prepared to lend customers cash — but on tougher terms than the boom years in the run up to the 2008 financial crash.

Bank of Butterfield chairman and CEO Brendan McDonagh said: “There is no doubt that following the global financial crisis, prior to which many banks had over-lent to their customers, banks have tightened up their lending policies.

“That is not a bad thing as long as people continue to have access to lending facilities they need and can afford. Lending has to be based more on earning ability, versus asset value.”

Mr McDonagh was speaking as he joined HSBC CEO Richard Moseley and Clarien Bank CEO Ian Truran for a round-table discussion organised by professional services firm KPMG.

Mr Moseley added: “This jurisdiction has returned to what can be termed as a more pre-bubble environment.

“Our approach as a bank is to lend in a sustainable way, which is important for both business and individual customers and shareholders.

“We are helping people think through their business and learn to use management information more effectively. This will materially reduce the risk of having more difficult dialogue in the future.”

Finance Minister Bob Richards took a swipe at the Island’s banks in his 2014 Budget statement and said their lending practices were “at odds with Bermuda’s national economic interests”.

And he added that the banks had lent money too easily in the run-up to the recession — then slashed loans in the aftermath of the crash, cut interest rates on deposits and laid off staff.

Mr Truran said: “Being largely Bermuda-focused and strongly residential lent, we have our challenges.

“It is in our best interest to work with our customers, who want to work with us, but there comes a time to deal with hard times and we have been going through such times for the past couple of years.

“We are, however, certainly open to good new lending proposals.”

Mr McDonagh added: “Lending by banks is key to helping expand the economy. If there is demand for financing for feasible projects, Bermuda’s banks will be there to supply the credit.

“But to be clear, it is not the supply of lending capacity by banks that will generate economic activity, it is the demand for lending by people who have realistic business cases.

“It is important that we are diligent in assessing the creditworthiness of projects in order to help support growth in our economy.”

Mr Moseley said: “Only where customers are confident to leave their funds with banks by way of deposits are banks subsequently in a position to lend these funds out.

“So banks have a very important role in terms of supporting the right borrowers to make those investments through a combination of equity and debt.

“We are very happy to play our role as a debt provider, but it is important that there is an appreciation that this is a combination of a good business plan and the right mix of equity and debt.”

Mr Turan added: “We want to lend but we cannot simply say ‘yes’ in all cases in the challenging environment in which we find ourselves. We want to see Bermuda on an upturn and we want to be part of the expansion to come.”

HSBC Bermuda CEO Richard Moseley
Clarien Bank CEO Ian Truran