Friday, March 27, 2009

Banks and mortgages in Cape Verde

MANY clients have asked us why there have been so many delays with their mortgage applications. Others have requested a recommendation for the best banks in Cape Verde and yet others have asked us if we think they will ever be able to get a mortgage...

As we have all been made painfully aware in the last 6 months or so, the banks in the whole world have been going through absolute chaos. Share values of the biggest banks in the world have been decimated in disastrous days of share trading. Trust amongst the international banking community is at an all time low.

Clearly this has dealt a blow to the banks in Cape Verde. Although none of the local banks have been involved in what the Spanish minister of Economy, Solbes, described as "Financial Engineering", they are all, in one way or another, linked to the international financial world and so have had to act with more and more caution.
But what of the other banks that operate in Cape Verde? Well, given the historical ties with Portugal, most of the banks in Cape Verde have a link of one kind or another with Portuguese banks. In some cases they are owned directly by them.

BCN, for example, (Banco Cabo Verdiano de Negocios) is owned By Banif (Banco Nacional de Funchal). BCA and Banco Interatlantico are both owned by Caixa Geral de Depositos, one of Portugal's largest financial institutions. And there is BES (Banco Espirito Santo).

The main bank that work with Tecnicil on the Vila Verde project is BES. BES is a Portuguese bank, one of Portugal largest banks.

Now, if we can rewind to last year, the banks operating in Cape Verde, with BCN leading the way, were quite open and aggressive about the conditions they would be offering.

ALL said they WOULD do non-resident mortgages with BCN talking of rates of up to 80% loan to value. BES was clear in that they did not want to go higher than 50%

HOWEVER, BES was the first to come forward and suggest that they might include the furniture package in the mortgage. BCN rapidly followed suit and soon it seemed everyone would be able to bundle the property with the furniture with BCN and BCA speaking of at least 70% loan to value.

Typical spreads were between Euribor +1.5 (BCA) and 3% (BES). For those of you new to the overseas mortgage, the "spread" is the amount of percentage points added to Euribor (The European version of Libor). This will then give you the interest rate that you ultimately pay.

For example, of you have Euribor + 3% and Euribor is 4% then you would have a mortgage at 7% Get it?

Then the banks all went to Radio Silence! Or perhaps "Silent Running" is more apt?

BES was the first bank to committ to new conditions.

50% LTV NO furniture allowed! Spread was Euribor +3% (According to status, obviously).

The other banks then followed this lead. Even the ambitious conditions that BCN had been offering seemed to evaporate in the light of BES' new conditions. Yet, to be fair, BES had not really moved their position. All they made clear was they were no longer going to contemplate any risk for furniture.

Does this mean NO other banks are lending? No, we have had approvals for clients through BCN, BCA and Interatlantico. The main difference is that BES has clearly decided to push the pace and is now approving much faster. BCN continues at a snail's pace and BCA are a bit like Google, or at least, WE can not perceive the logic in the way they work!

At Tecnicil we have been happy to take on any client mortgage application and run it past the banks. There seems to be a belief that "our" banks are BCN and BES, when the reality is that we place applications with most of them. Which are the best? That depends on your status, but it is clear that BES will approve faster than the others at the moment. However, their valuations have come down in the last few months so that 50% Loan to value can sometimes work out even lower.

So, if you want MORE information on this or would like us to manage your application then please write to Rosemary de Cruz on

Bom fin de semana!

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