REPORT #335 June 2000
OFFSHORE BANKING IN BELIZE


Produced by the Belize Development Trust

Offshore Banking in Belize has always been a puzzle to me. It is not customer friendly, nor does it seem geared to gaining market share. Be that as it may, I just dismissed the whole thing as too convulated and regulated to bother with. Recently in the Reporter of June 18, and June 25th, 2000, the Provident Bank and Trust of Belize Ltd., published two paid full page articles concerning their approach to offshore banking in Belize and listing one of the problems they have with it.

I might clarify here, that I'm supposed to know about these things, but there are far more things I don't know about in International Finance, than I do know about. So, I work within narrow parameters of my need. I run a number of Belize Trusts, among which is one called the SUISSE-BELIZE INTERNATIONAL INVESTMENT TRUST. Basically, it is PRIVATE BANKING and INTERNATIONAL INVESTMENT MANAGEMENT. This Trust did pretty good this year so far. When the market dropped dramatically early in the year and everyone was scrabbling, our investments rose 24%. Since then the market rose back part way and our portfolio in this Trust settled back down to about a 14% gain. We also get around a 6% to 10% dividend return. While this is not a spectacular performance, the purpose of this particular TRUST vehicle is more to PRESERVE capital, rather than speculate on growth stocks, or mid-caps or any other kind of high risk investment. We have a small bunch of undervalued Blue Chips on the American Markets in which we invest and one criteria is that they have to have paid a dividend for around the last 25 years. Basically, we accumulate on dips. Judgement is based on Price Earnings Ratios and Dividend Ratios and a few more things.

The point is, that foreign money and today our investment clients are solely South Americans using nominee certificate holders, so in fact we never actually know who the client finally might be, we only have the client of record. This does not matter because money in this TRUST investment vehicle is parked money intended to stay in one place for years. It is EMERGENCY money for business people who have to tackle with inflation and devaluation in their own country economies at a rate Belizeans never ever dreamed of. It is just Dollars parked for a rainy day. Consequently, there is no turnover to speak of. Or it is someone old and sick who is expecting to die and wants something to leave for the grandchildren under specific circumstances. Being a Private Banker, or a Trustee holding money is not something you get a certificate, or license in. Neither would be of any value. Because the whole premise is based on character, honesty and trust, personal knowledge and a reputation for discretion. We bank in the USA and invest in the USA mainly, though we are investigating a development project in Panama, the TRUST portfolio not really being too large. We did have a French client one time, but she pulled the money over a year ago, to build a big mansion in GRASSE overlooking the Mediterranean. Her cousin had a $3 million castle on a hillside in this rich people's valley and she was getting old and wanted to compete with her cousin for her children's sake before she died.

My clients are friends, so actually I personally don't make any money off this thing. I had hoped one time that it would go commercial and I would get an income from it, but it never worked out that way. Though I had hoped at one time to acquire more clients. Being a Private Banker handling someone else's money, you usually use commercial banks. You don't have a bank of your own. Which brings us around to Belize Offshore Banking. It would be nice to bank out of Belize, but I have never been able too, for several reasons, which may explain or confuse you and me, about whatever Offshore Banking is going on in Belize.

Belize Bank I feel I understand. It is a private bank basically, that the owner through various corporations uses to invest in Belize. The returns are good, in dividends and over the years, the person controlling the votes in the bank seems to have tripled or quadrupled the money several times. Belize has a poor financial system. The fixed ratio is $1 Bz to .50 cents USA, but because of overspending and poor management practices, the actual local currency is only around .03 to .05 cents in US dollar value. In practical matters internally this doesn't effect much, except for the demand on incoming foreign dollars. The government is so much in debt, that rationing has been instituted, to ensure that payments can be made on the foreign national debt. This makes Belize a very poor place to park foreign currency, or in which to invest foreign currency in large amounts. The subsequent rationing, exchange permits and controls leave someone wanting to use Belize as a place to leave foreign currency a risky place and expensive with a lot of charges and commissions not necessary if you go to another country better managed financially.

If you invest in Belize though, it is a different story. If I had millions invested in Belize and my dividends each year came to millions, I would also want my own bank. Mainly to change that Belizean currency into foreign dollars, or sterling, or Euro dollars or whatever, in which to spend someplace else. You would be able to park incoming customer foreign currency in a dark room and periodically exchange it for Belizean currency and fly a few suitcases loaded with foreign currency out of Belize. This would avoid all the costs and red tape with such transactions. Percentage points are critical in financial affairs.

Provident Bank & Trust though in their articles say they are regulated to $10,000 USA per year for each customer. This is a very strange thing to my mind. I cannot even think of much of anything that you could do running an investment business that would be under $10,000 USA. Most minimal requirements are far higher than that. The only rational I can come up with for Provident Bank and Trust is that it was created to be the vehicle to handle the financial affairs of the Internet Gambling. In which case, the credit card withdrawals would be part of the chain of money for the gambling bills. Most customers apparently will be smaller players gambling under $10,000 USA per year. I guess the gambling business is geared to volume of customers and a few other things I can think of.

For my purposes, Provident Bank & Trust of Belize Ltd., couldn't handle my account. They did say in the articles though, that Atlantic Bank is also a registered Offshore Bank. But if they have the same $10,000 limitations, that also leaves one mystified as to what kind of clients they could possibly have? I know merchants trading between factories in China and Asia and Europe and Panama that the lone commissions on their monthly transactions would pay a private banker like me, about $5000 a month in commissions, if I could get their business. There is about $2 Trillion going through the Financial Centers of the Caribbean annually. That is a lot of commissions. Which is why the Group of Seven have declared financial WAR. As it is, I prefer to remain small and discrete as a service. Private banking is a different type of field.

Offhand, Belize as an Offshore Banking Center doesn't seem worth much. You pretty much have to have a specific purpose to even consider it. In a press release of June 18th, in the Reporter by Provident Bank & Trust of Belize Ltd., they claim that a competitor, the Belize Bank are in violation of law. Specifically, they say Belize Bank is a domestic bank and has no right to do an OFFSHORE Banking division, without separate incorporation and separate capitalization. I wonder what the capitalization requirements are for an Offshore Bank in Belize? The article does not say.

Neither Belize Bank, or Provident Bank in their Offshore activities would seem to suit me. Mainly because they are privately owned and competitors. Their opening accounts, under the "know your customer" rule are invasive of privacy. I could not see myself giving all the customer information they ask for. As private banks and competitors that would be tantamount to giving them my customers to steal. With the check payment record and the upfront information they want, they have all the information they need, to steal my business, such as it is, or anyone elses. The banking conditions in other countries including the USA are far more applicable. Got money, sign the government tax papers and deposit it, and away you go! Further personal information, the likes of what Belize Bank and Provident Bank are asking is not required.

The customer is king! And opening an Offshore Account in an Offshore Bank of Belize does not seem like a logical thing to do. The business is rigged and unfriendly! Better to go to other countries who are more business like and professional.

Government in Belize is going to have to change a lot of things with Offshore Banking and internal domestic banking if it wants some of that $2 Trillion a year flowing annually through the Caribbean financial centers.

Back to Main Belize Development Trust Page

Maintained by Ray Auxillou, Silvia Pinzon, MLS, and Marty Casado. Please email with suggestions or additions for this Electronic Library of Belize.