We wrote-off less than $1 billion – DBJ

The Development Bank of Jamaica (DBJ) has admitted to a substantial write-off of money it advanced to the National People's Co-operative Bank (NPCB) but says this was less than the $1 billion reported last week.

Responding to a Sunday Gleaner article published last week under the headline 'PC banks worries worsen', managing director of the DBJ Milverton Reynolds said the figure was one of the inaccuracies in the story.

According to Reynolds, the write-off was done in 2007 and totalled $712.7 million instead of the $1 billion reported last Sunday.

He argued that the NPCB, which lends mainly to small farmers and the agricultural sector, accumulated non-performing loans due to a series of natural disasters over a period of 25 years, and the write-off was the only instance that the DBJ gave up money to the NPCB.

Reynolds said the DBJ's current portfolio of loans to the NPCB amounts to $1 billion, and all loans making up this portfolio are being serviced in accordance with their terms.

more vigilant

The DBJ head added that while his organisation does not have responsibility for monitoring the Agricultural Credit board, which is the responsible regulatory authority for the NPCB, the recent concerns raised in the media means it will have to be more vigilant to ensure that the cooperative bank remains a viable financial entity.

According to Reynolds, "Given the importance of the NPCB as a distribution channel for agriculture and other SME (small-, medium-sized enterprises) loans, the DBJ has always played a major role in ensuring the viability of this institution.

"Additionally, because of the size of the DBJ loan portfolio, we have exercised monitoring and oversight responsibilities of the NPCB to ensure that the DBJ loan portfolio remains current.

"In keeping with these responsibilities, the DBJ has sought to provide various forms of assistance to the NPCB to ensure that it remains viable. These include training programmes for NPCB personnel, development of a strategic plan for improvements of operations, and information technology systems upgrades in accounting and banking," said Reynolds.