Tue | Aug 4, 2020

Gallimore going after all outstanding PC bank debt

Published:Monday | November 6, 2017 | 12:00 AMAvia Collinder
In this 2011 file photo, persons walk out of the National People’s Co-operative Bank’s Spaldings branch in Clarendon. The new regulator of the PC Bank plans to collect all of the outstanding loans on the lender’s books.

Errol Gallimore, registrar of the Department of Cooperative and Friendly Societies, DCFS, says nearly half of the loan portfolio of the National People's Co-operative Bank is in arrears, but he plans to collect all the outstanding debt.

Gallimore's department took control of the loan portfolio of the PC banks the Agricultural Credit Board this year, but is awaiting the gazetting of the law to start taking action on collections.

"The priority actions that will be taken will be to recover the members' funds from those who are not paying or have refused to honour their obligations," the registrar told Gleaner Business.

"Therefore, as a general warning, the DCFS will be aggressive is this area to the point of seeking legal advice to amend the entity rules, that will allow the publishing of the names of the chronic delinquent borrowers. So changes are coming," he warned.

The DCFS itself already supervises 28 credit unions with assets of about $100 billion, a deposit base of $78 billion and loan portfolios totalling $71 billion.

The PC Bank, which will be supervised as a stand-alone entity, has a loan portfolio of $2.33 billion, of which 48 per cent or $1.12 billion was delinquent up to September of this year, Gallimore said.

A loan is classified as delinquent when it is 90 days or more in arrears.

The PC Bank has a membership base of around 13,000, assets of $3.98 billion and savings of $4.18 billion.

The 110-year-old institution is considered Jamaica's go-to community bank for rural agricultural development. It provides members with savings instruments; loan facilities geared at MSMEs; legal services, inclusive of wills and land titling; and family indemnity plan insurance.

The institution is based in Mandeville but operates nationally, with branches in all parishes, except Kingston.

The revocation of the Agricultural Credit Bank's oversight of the PC Bank network took effect on February 8, following an amendment to the law governing the ACB.

The change came two years behind a public scandal regarding the high levels of non-performing loans at the PC Bank.

DCFS was chosen as the new overseer because of the "overlapping jurisdiction" in the supervision and monitoring of industrial and provident societies. The PC Bank, he said, was already registered under the Industrial and Provident Societies Act, and the DCFS registrar had been made the regulator of those societies back in 2010.

The majority of delinquent PC Bank loans have been outstanding for more than 180 days. That non-performing debt is estimated at $970 million or 42 per cent of the total portfolio, Gallimore said.

"The portfolio has about 50 per cent of the non-performing loans being held by 20 to 30 persons holding $3 million and more and the other 50 per cent by small businesses and other small agricultural loans holding under $3 million," the registrar told Gleaner Business.

The PC Bank is currently being managed by a steering committee appointed by the Agricultural Credit Board.

"A decision is imminent and will be taken regarding the continued tenure of this committee, as soon the new act is gazetted, as the committee has been in place for the past three years," Gallimore said.

The bank will continue to issue agricultural loans to its members, "but under a stricter and tighter credit administration portfolio," he added.

The traditional sources of funding for the PC Bank have been the Development Bank of Jamaica and members' deposits.