NCB boss denies FINSAC deal led to his job

Patrick Hylton, group managing director of National Commercial Bank Jamaica, denied any connection between the sale of the bank to Jamaican-Canadian investor Michael Lee-Chin's AIC Limited, and his position as NCB's current boss, at Wednesday's sitting of the FINSAC enquiry.

Asked by attorney-at-law for several FINSAC creditors who were victims of the 1990s meltdown, Anthony Levy, whether it would be correct to say that the NCB was "given away", Hylton said he "totally disagreed."

Asked what price the bank was sold for, Hylton said that AIC paid about US$120 million for the 75 per cent of the shares held by FINSAC, valued at some US$175 million over a 6-8-year period.

AIC bought the shares in March 2002 for J$6 billion, but paid J$2.6 billion (the equivalent of J$48 per US$1) upfront and the balance in eight annual instalments over the next nine years.

Asked whether the bank made enough in its first year of operation under AIC to cover the price paid for it, Hylton was dismissive of the query.

"Absolute nonsense; far from the truth, it was not even remotely close," the banker said.

After AIC took over NCB in March 2002, the bank enjoyed the most profitable financial year in its history up to then, ending September 30, 2003 with net profit of J$2.8 billion, compared to J$1.5 billion in 2002 - an increase of J$1.3 billion or 86.7 per cent.

The positive performance was attributed to increases in loans and securities income, as well as net portfolio income. Dividends per share paid rose to 51 cents, compared to the 17 cents paid the previous year.

Levy insisted that the sale was "a gift" to the purchasers from the Government, but Hylton said he could give several reasons for disagreeing, among them that the bank was available for sale and advertised worldwide for some time without success.

"The fact of the matter is that we tried to get even an investment bank to work on our behalf to sell NCB. Several declined because they didn't think that it was possible", Hylton said.

Regarding the loan portfolio, "they didn't think it was saleable and declined to participate," he said. "We made representations to several financial institutions in the region and across the globe, and none of them expressed an interest."

Hylton said the only person who, eventually, showed genuine interest was AIC's Lee-Chin. He added that the eventual sale price was in the range of the valuation for the institution.

Levy suggested that Hylton's current job was part of a deal.

"That is so ludicrous; I don't even know if it is worth a response, quite frankly," the banker responded.

Hylton said that Lee-Chin went on record saying that he should be given a "knighthood" for persuading the billionaire investor to buy NCB. (Lee-Chin, who has sold off his mutual fund business to Manulife Financial, fell off the Forbes' billionaires list published earlier this year.)

"What a lot of people didn't know was that his own financial advisers, advised him against purchasing the shares in the bank," Hylton said. "I spent a lot of time trying to convince him."

He admitted that the compliment was returned, a month later, when the bank initiated contact to inform him that Lee-Chin wanted him to work there.

"I told him that I didn't even consider it, because I had other plans," he said, noting options to either go to Harvard, work overseas with the Inter-American Development Bank, or join a private consulting firm. He eventually took the job as deputy managing director at NCB in May 2003, with his predecessor, Aubyn Hill, at the helm.

"They were pretty persistent - every single month for a year, sometimes several times per month, I got a call," he told the commission.

The enquiry resumes this morning, July 8, at The Jamaica Pegasus hotel, New Kingston, when Hylton's successor at FINSAC, Errol Campbell, will return to the witness stand.

Hylton is to answer a number of questions to be sent to him by the commission's attorney, Judith Clarke, on behalf of FINSAC borrowers who have no lawyer at the enquiry.

- JIS