Facilitating divestment has meant preparing our institutional holdings, in both the banking and insurance sectors, for sale.

In the case of National Commercial Bank (NCB), there was a need to re-organise our own shareholdings and to look critically at how the bank and the whole NCB Group were configured. What we concluded was that there were too many non-core operations still existing, within what was essentially a financial institution, to attract the quality of investor that we would like. It was also felt that it would be easier to sell a majority holding in a bank, rather than minority holdings in a group and a bank. Consequently, there was a need for substantial reorganisation. This was a complex and involved process successfully completed in December 2000, resulting in FINSAC owning directly, some 75% of the bank. Meanwhile the non-core, non-financial elements of the bank were transferred into the workout unit within FINSAC, specifically formed to maximise the value of such assets. Negotiating this reorganisation and implementing it, was, I believe, a major achievement. The divestment of our shares in NCB is now being actively pursued with the assistance of HSBC plc. as our investment bankers.

Disposing of our shares in Union Bank was another milestone. No one looking at the genesis of Union Bank, and the process through which it was created, can dispute that this was a significant merger and a massive rehabilitation exercise. Bringing it to a stage where we were able to find a credible investor willing to purchase this bank and to take it forward, was certainly another success that we achieved during the past year.

I would like here, to give credit to the FINSAC staff and consultants who worked on these banking reorganisation programmes. Much credit is also due to those who worked on our insurance sector transactions. Although the successful rehabilitation of the Mutual, Crown Eagle and Dyoll portfolios was completed last year, the residual tasks to finalise the sales to Guardian Life and First Life were detailed and taxing, and considerable hard work went into this particular process during the past fiscal year. In addition, significant time was spent on the rehabilitation of Life of Jamaica, which culminated in our purchase of 76% of the company and the tendering of our interest for sale through a public bid process.

Another major task during the year was the preparation of our non-performing portfolio for sale and the beginning of the divestment of that portfolio. This too, was a very involved process and took a lot of hard work. Special thanks are due to the people in our Non-Performing Loan Unit. They worked continuously throughout the year including many weekends and many late nights, putting together detailed information packages on loans, so that potential investors would be able to make informed judgements. This process is not yet complete, but at the end of fiscal 2000/2001, we are perhaps 75 to 80% of the way there.

Inevitably, as our work has progressed and moved towards the completion of our mandate, the staffing needs at FINSAC have been gradually reduced. Thus, fiscal 2000/2001 has seen our organisation slim down in size, with many colleagues leaving us, including three of our General Managers, who also served on our Executive Management Team. The contributions made by Marilyn Hill to our banking sector operations, by Maxine MacLure to our insurance sector activities, and by David Wan to our monitoring and evaluation work have all been exemplary. Their leadership in the rehabilitation and restructuring of Jamaica’s ailing financial institutions has improved the health of our financial sector beyond measure. I cannot thank and praise them enough for their efforts and dedication over the past years. I am pleased to say that these professionals, and the many junior staff members who have also left us during the past year, are, almost without exception, being successfully transitioned into other roles within our financial sector. It was always part of our vision that working at FINSAC would provide a unique opportunity. That vision is being realised, and it is gratifying to see so many talented people, who have contributed to their country’s development by working for FINSAC, moving on with enriched professional lives.

So, as FINSAC continues to wind down, what are the remaining tasks ahead in the next fiscal year? I think there are four specific achievements we need to aim for. One is to complete the sale of our shareholding in NCB. Here, as I have said, the process has already started. The second, is to complete the sale of our non-performing loan portfolio. Here too, the process has begun. Our third task is to complete the sale of our shareholdings in Life of Jamaica. Again, this is already underway, and a successful outcome appears imminent. Finally, we need to find an effective strategy or methodology to accelerate the sales of the commercial real estate that we are holding. So far we have met with limited success in this area, but recent expressions of interest and the overall market indications are encouraging,

To summarise, FINSAC is well on track at the end fiscal 2000/2001. We are, in fact, ahead of schedule, and it is likely that the end of fiscal 2001/2002 will see FINSAC relegated to history. It is my sincere belief that we can all be proud of what we have contributed to building a new financial sector for Jamaica. It is my sincere hope that history will judge us kindly.

Patrick Hylton
Managing Director

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