An extract published in the press “…..There is an element of overlap between the roles of MIC and commercial banks in relation to emerging sectors. We appreciate the importance for MIC to stabilise its portfolio, and the strategic need to stimulate emerging sectors. At the same time, there must also be a level playing-field. MIC has fewer regulatory and prudential constraints than banks, and has been seen to outcompete banks on certain deals. This could result in a situation where banks are effectively excluded from emerging sectors and greenfield projects.”
Oh Yes, now MIC is unfair competition !
Do you recall, at the time that we were having to bear the full brunt of the pandemic, the CEO of the MBA was pressing for MIC to come to the rescue and was warning us that “….if a significant proportion of borrowers fail to repay their loan,.. in such a case, financial institutions could face a liquidity problem in a systemic manner, which would cause a financial crisis.”
He also added that ”.... the authorities have made available to banks and economic operators lines of financing, including the Mauritius Investment Corporation (MIC), and are closely monitoring the situation. As long as these mechanisms work, and economic operators retain a certain visibility, the financial crisis should be avoided.”
Meanwhile , our top commercial banks , especially our MCB, fearing an increase in non-performing loans and greater scrutiny from the credit rating agencies, were more bothered about profiting from their well-established business and trade finance outside of our frontiers than helping our borrowers,including our highly indebted hospitality sector , to stay financially afloat in the face of the sharp income shortfall.
Our top banks were wary of lending despite sitting on huge cash piles. While “nou ti dan baize”, they were cutting back their lending to construction and tourism sectors as well as to other precarious economic operators while improving their risk profile and asset quality.
The proverbial Mauritius Investment Corporation (MIC) came to the rescue . If there was no MIC, we would have had to create one. The authorities had no choice, Government and the MIC had to step in to bail out the distressed sectors .( MIC's ownership and financing is another issue that we have raised elsewhere!)
But at what cost ?
Now that the outlook for the tourism sector looks brighter, our local banks think MIC is unfair competition !
They want to have the cake and eat it ; win it both ways…..and now more bothered about ensuring that they will able to continue with their hefty bonuses and dividends…at our expense !
