Photo: Marlowe Neal, Administrator – SFXCU

by Marco Lopez

BELIZE CITY, Thurs. Sept. 7, 2023

Extensive work to right the course of St. Francis Xavier Credit Union (SFXCU) has been undertaken over the past 5 months or so by the now departed administrator who was appointed by the Central Bank of Belize, Martin Marshalleck. He has moved on to “greener pastures,” according to Central Bank Governor, Kareem Michael, and has been replaced by fellow career banker Marlowe Neal. Neal is now tasked with continuing the process of creating a modern governance framework for the credit union—a task that Michael said the employees of the once-tarnished financial institution have embraced.

“We have a good feeling about St. Francis [Xavier Credit Union], and we want St. Francis now, in terms of governance and performance, to be a model for what credit unions should be. It’s a target to achieve, because many of the credit unions have not elevated their governance framework, and a lot of the issues we’ve seen in the past that have troubled credit unions boil down to governance, weak governance systems within the credit unions,” Michael stated during a press conference hosted by the Central Bank this week.

Under the leadership of suspended SFXCU general manager Raphael Dominguez, SFXCU accumulated a large number of non-performing loans. The administrator found that the ability of borrowers to repay loans was not being properly assessed by the credit union. Moreover, many of these non-performing loans had not been properly categorized, nor had provisions been in place to safeguard the institution’s assets. Overall, very poor loan administration led to the credit union’s fallout and Central Bank’s intervention, explained Michael.

But all that is about to turn around, says Michael, and by next year in June, the inquiry into, and restructuring of, SFXCU’s operations may be completed, setting a well-placed precedent and a modern governance framework for all credit unions in Belize to follow in order to upgrade the outdated practices of those institutions.

“The transition now is that, once we have placed these governance frameworks and other policies and procedures, we expect this to be no longer than a year,” Michael said.

Michael, who also serves as Registrar of Credit Unions, noted that the date is not set in stone, since they want to ensure the proper “systems, policies, and procedures” are in place.

As for Marshalleck’s departure after roughly 5 months on the job, Governor Michael said he received an offer that the credit union could not match and, in any case, one that would not be accepted by himself as Registrar.

He further pointed out that Marlowe Neal, a long-time banker, had been on the team with Marshalleck, making his transition to the role of administrator seamless.

The Central Bank hopes that with the completion of this exercise with SFXCU, a regularized standard of oversight and governance for credit unions across the country can be created and rolled out. He said that the Central Bank has been attempting to introduce a modern Credit Union Act for the past 7 years, but has so far been unsuccessful in doing so.

By the end of this year, however, those institutions will have new legislation — in line with global standards—to adhere to, Michael explained.

“It begins with the tools granted to the Registrar under the Credit Union Act. The current Credit Union Act is dated. And so, we want to bring about the global standard now for credit union operations, and we can only do so if we repeal the current Act and institute a new, modern Credit Union Act. So, it starts there,” Michael said.

They expect this new Act will empower the Central Bank with “the teeth to then do more.” These measures will be taken not only for credit unions, but also for improvement of the standards of the money lenders and commercial banks’ legislations.

It thus appears that while SFXCU may have gotten a bad rap for maladministration, leading to the suspension of its former GM Raphael Dominguez, and the national outcry of its customers, the measures being taken now within the institution may lay the foundation for a new era in credit union operations in Belize.

As for Dominguez, he maintains that he has been “singled out” by the Central Bank. According to Michael, Dominguez still receives his full salary.