Intervention Activities
The period of time covered by this Annual Report is from FINSAC's establishment on January 29, 1997 to the date which marks the end of its first full financial year, i.e. March 31, 1998. This fourteen-month period saw extensive intervention into Jamaica’s financial sector by FINSAC, as follows:
FINSAC reached agreements with the Eagle Financial Group, Life of Jamaica Insurance Company (LOJ), Island Life Insurance Company, Dyoll Life Insurance Group, Jamaica Mutual Life Assurance Society (Mutual Life), The Horizon Group, and Fidelity Merchant Bank.
FINSAC acquired the Eagle Financial Group for J$1. It provided recapitalisation support for LOJ, Island Life and Dyoll Life, mainly through the purchase of newly issued preference shares and the purchase of 26.5 per cent of the ordinary shares of each company. This was done in order to enable FINSAC to more effectively oversee the rehabilitation of these entities and to ensure that taxpayers benefit from any upside in the recovery of the entities.
FINSAC acquired control of Citizens and Eagle Commercial banks, and majority control of the National Commercial Bank (NCB), later re-capitalizing these banks and purchasing or underwriting their non-performing loan portfolios. In order to reduce the risk of contamination of banking entities by insurance and other businesses, Mutual Life and LOJ were required to divest to FINSAC their shareholdings in commercial banks - NCB in the case of Mutual Life, and Citizens Bank and CIBC in the case of LOJ. The debt of companies in the Eagle Group owed to Eagle Commercial Bank was bought by FINSAC, thereby giving FINSAC a further claim against the assets of these enterprises.
During 1997, there were extended negotiations between FINSAC and the Corporate Group regarding Workers Savings and Loan Bank (WSLB), Corporate Merchant Bank and Capital Assurance Building Society. In February 1998, the Minister of Finance and Planning placed the banking entities of the Group under temporary management. Since then the shares of WSLB have been vested in the Minister, and FINSAC was put in control of the institution.
At the same time Caldon Merchant Bank was also put under temporary management, and under FINSAC's control.
Thus at 31 March, 1998, FINSAC had acquired control blocks of equity and/or board seats in five life insurance companies, at least five of Jamaica’s nine commercial banks, and through these banks’ subsidiaries, two building societies and four merchant banks.
By intervening as above, FINSAC was able to use its capital contribution to ensure that depositors, policyholders and pensioners did not lose their savings. Thus, FINSAC's intervention supported the stability of the financial sector, and preserved these funds for investment opportunities in the private sector and ultimately for the nation’s economic growth.
For ease of reference, FINSAC's intervention activities are set out in this report in the form of a table showing FINSAC's assistance to companies at March 31, 1998. Intervened companies are listed in alphabetical order, with a date column indicating when the initial intervention took place.
Following the table, a chart shows the structure of FINSAC's holdings. More detailed structures of the individual entities is available through the companies themselves. The chart includes the two Trust Companies set up by FINSAC to hold and manage its non-performing loan portfolios.
Tables & Charts Of
FINSAC Assistance To
Companies
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