FINSAC Annual Report 2002: Managing Director's Report

Managing Director's Report

The 2001-2002 financial year has been a particularly successful one for FINSAC. As most readers of this Annual Report will know, FINSAC was formed just over five years ago, with a mandate from Government to:

intervene in Jamaica’s ailing financial sector;
rehabilitate and restore our failing financial institutions to viability; and finally to
divest the public sector of its involvement in the banking and insurance businesses, and return all FINSAC-intervened and rehabilitated institutions to private ownership.

The estimated timetable for our work, based on similar crises in other countries, was that the whole process would take five to seven years.

Intervention was largely completed early in 1998, after only a single year of FINSAC’s operations.

The complex task of Rehabilitation by FINSAC was completed three years later, during fiscal 2000-2001.

Thus FINSAC’s focus in fiscal 2001-2002 was on our final phase of operations – Divestment. I am pleased and proud to be able to report that at the time of writing, this phase is, to all intents and purposes, also complete. FINSAC no longer holds a majority stake in any financial institution, and the resolution of Jamaica’s financial sector crisis is largely accomplished. After five years of operations, FINSAC is now rapidly winding down its activities.

The three major divestments back into the private sector, which we successfully achieved this year, were:

the sale of FINSAC’s majority shareholding in Life of Jamaica to a consortium led by Barbados Mutual Life Assurance Society and Life of Barbados;
the sale of FINSAC’s 75% holdings in National Commercial Bank to AIC Limited, a Canadian mutual fund management company, whose principal is a Jamaican now residing primarily in Canada; and
the sale of FINSAC’s Non-Performing Loan Portfolio to the Jamaican Redevelopment Foundation, which is a subsidiary of Beal Bank in Texas.

Details of these transactions and their chronologies are in the FINSAC Operations Report section of this document, which follows, so I will simply leave them as highlights here.

I would, however, like to make a few observations. The first is that these divestments were made against a background of difficult circumstances.

The violence in West Kingston on July 7th of 2001 effectively undermined overseas investor confidence in Jamaica. Advanced negotiations with a likely purchaser of our Non-Performing Loans Portfolio ground to a halt, and discussions with other potential bidders had to be discontinued due to the negative climate that had been created.

The tragic events of September 11th in New York and Washington D.C. deprived FINSAC of yet another interested potential purchaser, who felt the need to re-assess his investments, both within and outside the United States.

Notwithstanding these setbacks, FINSAC’s team stuck to the task at hand, and armed with an even stronger determination and focus, was able to marshal the creativity and initiative needed to carve out successful

Patrick Hylton
Managing Director

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