The Jamaica Mortgage Bank(JMB) will seek to boost its capital base through a public offer of shares rather than issueing more bonds, which has been a major drain on its resources over the years.

Cabinet last week approved the divestment of the agency, which the Government intends to privatise by the end of 2011

Minister with responsibility for Information, Daryl Vaz, at a post Cabinet press briefing, said JMB will be converted to a private company that will be regulated by the Financial Services Commission in order to better facilitate home ownership in Jamaica.

The diversification of JMB is expected to ensure adequate financing and prudent management.

The bank, which mobilises loan funds for on-lending to public and private secotr housing developers and to other lending institutions, had a capital base of $1.83 billion up to March 31, 2009, but was estimated to lose near-$60 million for the year ending March 31, 2010, after netting losses totaling $298 million the year before.

The loss in 2008/2009 was largely associated wit a $252-million provision for bad debt and losses, even while its total loan portfolio stood at $1.68 billion at end-March 2009.

What’s more, provision for losses totalled $876 million compared to loan receivables totalling $2.18 billion at end of March this year.

Bad debt aside, interest on JMB’s $1.5 billion in bonds alone is a drain on the agency’s income, having totalled $253 million in 2008/2009 and $269 million in 2009/2010, compared to revenue of $355 million and $352 million, respectively.

The bank indicated in the Jamaica Public Bodies estimate of revenue and expenditure for 2010/2011 that it would raise an additional $500 million from bond issue during the fiscal year to help finance and $801 million disbursement in loan funds to finance the construction of 1,093 housing units throughout the islands.

However, JM expected to see interest on bonds decline by more than 20 per cent, likely as a result ofthe Jamaica Debt Exchange (JDX) which heralded in considerably lower market interest rates.

An enterprise team, headed by financial consultant Carlton Cunningham, has been established to giude the divestment process, he said.