Fri | May 24, 2019

Mark Wignall | Banks and the rich make a good fit

Published:Sunday | April 8, 2018 | 12:00 AM

I would have taken a bet - and be sure I would win that well-known businessman, entrepreneur - and investment banker Mr Chris Dehring would be among those MVPs in the business community in this country for whom banks would be bending over backwards to facilitate loans for business development.

As carried in The Gleaner as his attributed quotes, '"If I can't get start-up funding, by God, with my track record and how much money I am putting in, who are they lending money to?" he said incredulously as the guest presenter at the Lunch & Learn series hosted by the Jamaica Business Development Corporation.

But he also had an answer for that: "the same people over and over again".'

In an age where 'investment friendly' is the mantra of that crack unit at the OPM (Office of the Prime Minister), one would have thought that banks would have outfitted their loans department with a suite of packages to suit, at the very least, specific size loans.

Mr Dehring needs US$3 million to complete the build-out of his ReadyTV, but he has become frustrated trying to source it through the local banking system. Mr Dehring is a highly skilled investment banker who made his money in the 1990's when many other businesses and individuals were being devastated by the monetary policies and the crippling interest rates.

Many did not make it, but Chris Dehring and his partners swam through just fine. Now, the question has to be asked based on Mr Dehring's statement, is there a specially secluded and select fraternal order of names, associations, and businesses that form the ideally accepted loan partners in this country for merchant and commercial banking?

The obvious assumption is that most others are squeezed out of having an opportunity to bake and taste the pie of business success.

A banker told me less than five years ago that 75 per cent of the depositors in his bank would never be able to qualify for a loan. Most, he said, lacked land titles and other items of collateral that the bank would prefer, which meant that the 25 per cent of those at the top needing loans relied on that vast deposit that existed at the base.

Coming out of the period of the early-to-mid-1990s when banks accepted that one part of their mission statement was taking risks, most banks in Jamaica in 2018 are conservative in their outlook as only those who practised core banking in the 1990's were able to survive the financial meltdown that took place.


Development favours the rich


Envision a plaza being constructed or developed at some uptown location. The developers know of the old adage. If you owe the bank $1 million, you have a problem if you run into arrears. If you owe the bank $100 million, the bank has a problem if you run into arrears.

Other factors are at play. The rental space for stores is going to be on the high side, so stores will have to cater to people who will be able to afford the high unit cost per product. In other words, it will not be a thoroughfare for the poorer class of people.

In essence, that uptown plaza being funded by big banks with well-known names involved knows that it is catering to that select 10 per cent to 20 per cent of those at the top and in doing that, it can make mad money. No 'krebby krebby' need enter.

I hate to say it, but I have always been too coward to involve myself in the illicit trade in ganja exports. I can quite appreciate men who did it, made successes of their lives and have now legitimised their business pursuits. There are quite a few of these in building construction, and I have always assumed that having cleaned up their acts in the banks, their main line of financing is those very banks.

But if not the commercial and merchant banking sector, what do they present to their suppliers at hardware stores? Raw cash?

Many small businesses like bars, shops, beauty parlours, garages, etc, subscribe to the many versions of 'pardner' to fund either their personal situations or to grow the business. They are under no illusions that the commercial banking system will accommodate their mostly cash-only system.

In fact, it is much easier for them to secure a loan to purchase a deportee for $2.1 million than to get a $2 million loan to fund expansion of floor space in the business. So you are not the only one bawling, Mr Dehring. The only difference is, the others have bawled for so long with no redress that they have long ceased the futile action.


Dr Tufton responded


Somehow I did not get to call health minister Dr Chris Tufton before I penned last Thursday's column, 'Not good enough, Dr Tufton', so I was not at all surprised when he called in response to it.

"I'm only sorry you did not call before," he said, then added, "I have to take blame there because I could have communicated all that was taking place at CRH (Cornwall Regional Hospital) in a much better way."

Dr Tufton agreed with me that the logistics in moving out all patients from the CRH is a nightmare. "We can't ask people not to be sick during the period when we are making a fix to the ventilation, cleaning up mold, and other such matters. We have to find a place for those who were already there while preparing for those who would normally show up at the hospital."

According to Dr Tufton, the section at the back of the building and the nurses quarters have been temporarily outfitted to deal with outpatients as well as the A&E.

"By this weekend, all patients should be out, and I will be making a full statement on that."

It is my understanding that since 2008, there have been 16 reports surrounding air-quality concerns. Dr Tufton told me that he was aware of them. "We have to move forward now. We have shut down the boiler and we are going to deal with the chimney stack. We have renovated a building at Falmouth to hold 40 beds.

"You can appreciate that anything that will upset the normal running at CRH is going to upset the lives of those individuals who are most prone to show up at such an institution. So it must always be top priority to get it back up and running as quickly as possible while at the same time not performing any half-measures that will put us back at square one," he said.


Where is the Finsac Report, Mr Bogle?


At last count, $100 million was spent on the FINSAC (Financial Sector Adjustment Company) report, and as far as bangs for buck go, this one is teetering on the edge of a total loss.

Generated as a campaign promise by the JLP, the period 2007-2011 went by. The PNP held power from 2011 to 2016, and the report went on leave. The PNP administration would never be anxious to facilitate any report that would be likely to highlight a major policy blunder of the 1990s and gross mismanagement during the FINSAC era.

The PNP lost in 2016, the JLP took power, and two years later, Mr Worrick Bogle, head of the commission, has been unable to deliver the report. There has even been a new finance minister in Dr Nigel Clarke, and still, no FINSAC report.

So, who must bear the pressure? The JLP administration or the FINSAC commissioners? The promises made by the JLP administration have reached embarrassing levels, and it appears that the technocrats from finance are never on the same page as the FINSAC commissioners.

The finance ministry and the FINSAC report are in a futile search for each other.