FORMER managing director of the National Commercial Bank (NCB) Jeff Cobham yesterday charged that many of the local businesses that failed during the 1990s financial crisis could have been saved if the finance ministry and Financial Sector Adjustment Company (Finsac) had agreed to lower the interest rates being charged on delinquent loans.

“It is my opinion that a number of businesses could have been given a better chance of recovery if lower interest rates were approved,” Cobham told commissioners during his testimony at the Finsac enquiry being held at the Jamaica Pegasus Hotel in Kingston.

“We felt the high-interest rate [policy] would go for six months, maybe a year. Nobody anticipated that this would go on for so long,” Cobham commented.

He said that many NCB customers, during the period 1994 to 1997, complained about interest rates, which in some cases moved from 25 per cent to 90 per cent.

According Cobham, the bank’s loan portfolio at the time was approximately $22 billion with some $13 billion “deemed and considered non-performing”.

Finsac acquired NCB’s non-performing loan portfolio in 1998, but yesterday Cobham said that the bank would have been in a better position to administer many of those loans if Finsac had agreed to its proposals.

“Even after those debts were sold there was an arrangement with Finsac where the bank collected and passed over funds on a no-fee basis,” Cobham revealed.

He said, however, that NCB was not able to make deals with its customers to facilitate repayment of the loans.

According to Cobham, assistance sought from Finsac in working out solutions with debtors was not forthcoming. “NCB, as a collection agency, was not able to make deals [with debtors],” he said.

“We were not given the level of co-operation in terms of our requests,” Cobham told the commission.

“The relationship which exits with a debt collector is rather different from that which exists between a banker and its customers,” he contended.

Finsac subsequently sold its bad debt portfolio to the overseas-based collection agency, the Jamaica Redevelopment Foundation.

Yesterday, against the background of the accommodations afforded to NCB by the Government, Cobham insisted that the bank was not given special treatment in relation to other commercial banks.

“I think the circumstances differed in the case of each bank,” Cobham said in response to queries from commissioners Worrick Bogle and Charles Ross. “It wasn’t because of favouritism.”

Cobham said that at another commercial bank, for example, with billions of dollars in loans there were cases of missing [customer] files.

“There was never any such occurrence with NCB… such an example of malfeasance, I state categorically that there was none at NCB,” Cobham said. “Nothing of that nature was ever found.”

Questioned by the commissioners about NCB’s foray into non-banking operations, Cobham said that given the bank’s success in financial management at the time, the directors felt that they could equally manage other businesses.

“We felt we were able to bring the same level of management to industries, which we knew nothing about,” Cobham responded. “At that time we felt we were able to manage those entities.”

According to data provided by Cobham, NCB Group made $825 million profit in 1995 and lost some $802 million the following year.

The enquiry continues next Wednesday.