The Financial Services Commission's (FSC) on going legal and public relations tussle with alternative investment schemes, Cash Plus and Olint was subject to intensive focus during the media briefing held on Wednesday. And the irony of the function held at the Hilton Kingston Hotel, allegedly owned by Cash Plus, did not escape the notice of the gathered journalists. Nevertheless, the regulator dismissed the idea that the possible collapse of either scheme would bring down the entire financial sector. "People should not fear a Finsac 2," explained Brian Wynter, executive director of the FSC.

The Financial Sector Adjustment Corporation (Finsac) was used by the government to bail out the financial sector that collapsed in the mid 1990s. The collapse was blamed on poor management decisions including the investment of depositors' short-term money in long-term assets such as hotels, orange and papaya farms and other real estate developments.

"As far as I can see, the alternative investment schemes are not large on a systematic scale," Wynter said: "At the end of 2006, the insurance and securities sectors together held J$523 billion (US$7.805 billion) in assets compared with J$629 billion (US$9.388 billion) for banks, building societies and credit unions combined," he explained.

It has been reported that Olint has approximately US$500 million (J$33.5 billion) under management. And while there are no estimates available for funds managed by Cash Plus, the reputed purchase price of US$42 million (J$2.814 billion) for the Hilton Hotel, gives some indication of the strength of cash controlled by the entity.

Wynter also sought to throw cold water on the idea that money is flying out of the financial sector into to coffers of the alternative investment schemes. "The growth of the capital base of securities dealers is indicative of the improving financial health of this sector." Wynter explained that at the end of 2006, the capital base of the securities dealers had increased by 62.7 per cent compared to the level two years earlier with the ratio of capital to total assets improving by 1.9 percentage points."

"Based on these numbers," Wynter said, "it is not a sector that seems to be losing funds." Even with the strength of the sector, Wynter was cognisant that some persons could be impacted if things went south with the alternative investment schemes. "That is not to say persons and individual entities are not exposed to risk."

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