The Financial Institutions Services (FIS), which has been handling the assets of FINSAC since mid-2002, netted $600 million from property sales and loan collections during the last fiscal year, and is expecting to wrap up the process which began over a decade ago, by March 31, 2007.

According to the memorandum to the 2006/07 budget, which was tabled in parliament last week, the government agency netted over $300 million from the disposal of properties, "including the Oxford Manor in Kingston, Sunshine Village in Negril and the Baywest Centre in Montego Bay".

FIS netted over $300 million from the disposal of properties including the Oxford Manor in Kingston.

FINSAC took over these properties from NCB (Investments) Limited, as part of the 2000 scheme of arrangement in which it had pumped liquidity into the banking group.
The FIS took over the job of winding up those FINSAC assets that were not liquidated by July 2002.

In October 2004, Mandeville realtor Tony James and his brothers purchased Sunshine Village, which houses 32 self-contained studio units, each 500 square feet in floor space and five commercial units. They sold 22 and retained 10 of the units.

The sale of the 65,000 square-foot Oxford Manor building to the Planning Institute of Jamaica for $250 million, after three years on the market, was completed at the end of 2005 .
Sunday Finance was unable to establish the purchaser of FINSAC's stake in the Baywest Shopping Centre in Montego Bay, up to press time.

In 2002, the Beale Group of the USA purchased about $68 billion of non-performing loans (including accrued interest) for liquidation under a deal that gave the government a percentage of the collections. Joslin Jamaica was hired to manage the process locally. Later when Dennis Joslin left Jamaica, the company was renamed Jamaica Redevelopment Foundation (JRF).

Last fiscal year, FIS received approximately US$4.4 million ($280 million) for its share of collections from loans sold to JRF. This would place the total government receipt from the loan portfolio - with a book value of US$397 million back in 2002 - at approximately US$35.4 million, or just under 10 per cent of the recovered value.

However, late last year, the government collected US$8 million - having in 2002 secured US$23 million in upfront payment on the sale of the Finsac bad debt portfolio to the American-debt collection agency.

Based on Sunday Finance calculations, using the formula for the government shares in the collections, JFR would have so far pulled in around US$80 million - either through the sale of assets or from payment by debtors.

On the first US$50 million, Jamaica's take would be 15 per cent, followed by 25 per cent on the next US$50 million. The government's share rises to 35 per cent and then 45 per cent on the next two tranches of US$50.

However, Jamaica's portion is after the direct costs associated with collection are taken out, which according to sources runs at 10 per cent of collection.

This meant that, in effect, the government receives 15 per cent of what is left or thirteen-and-half per cent of the full take.

Prior to the sale of the portfolio to JRF, the government had raised J$5.9 billion for the sale of non-performing assets acquired by the various agencies set up to take over dud loans after the collapse of banks and insurance companies in the mid-1990s.
Additionally, government agencies collected $6.8 billion from debt portfolios which were retained.

The government says it is hoping to complete the liquidation of the remaining assets under FIS' management at the end of the current fiscal year, which runs to March 31, 2007.

"The liquidation of the dormant companies under FIS control is almost complete, with fewer than ten companies remaining to be liquidated," said the document tabled in parliament last week. "It is expected that the few remaining assets will be divested during FY 2006/2007 and thereafter the primary residual activity will be that of coordinating outstanding litigation with external lawyers."

The FIS, created in 1994, handled the problems in the first two institutions, before the creation of FINSAC. The interventions began in the financial conglomerate Blaise Group, in 1994, and then the Century National Bank.

The UK Privy Council handed down judgment of approximately $3 billion against Century, and the Blaise trial commenced in February 2006.

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