Originally: Details of private bank loan to central bank

Key points:

— Total sought by BRH/GOH (amount of IDB arrears): $30 million

 — Total offered by the commercial banks so far:  $32 million, as follows:

 n       Unibank: $15 million

 n       Sogebank: $12 million

 n       Capital: $1 million

 n       Promobank: $1 million

 n       State-owned banks (BUH, BPH): $3 million

 — Unibank had in fact expressed its interest in providing the entire $30 million loan.

 — The loan would be a syndicated, short-term (three months or so) inter-bank loan to the BRH (not to the GOH).

 — Interest rate would be 9% per annum, with a 2% up-front fee. The banks would make $600,000 up front, then approximately another $675,000 on the interest if the term indeed turned out to be three months.

 — Would the banks ask that the BRH lower the reserve requirement on dollar deposits pari passu, then turn around and lend the freed-up dollars back to the BRH? ?No,? the banker answered. For one thing, that would get very complicated since the dollar deposits, and therefore the BRH reserves, of the banks are not all the same. More important though, the banker thought that the banks did not want to be perceived as setting a precedent of condoning the dipping into their dollar reserves by the BRH to finance its own needs. They will therefore make the loan from their available dollars, which is not a problem since these banks all have excess dollars – defined as dollar deposits and other assets (in Haiti and outside) not held by the BRH in reserve nor lent by the banks to clients. Obviously, the banks involved have decided that any risk of lending to the BRH/GOH is outweighed by the greater return (9% a year) than anything they are now getting on their US placements.