Overseas borrowers face challenges

Published: Wednesday | December 18, 2013 Comments 0
Maureen Hayden-Cater - File
Maureen Hayden-Cater - File

Avia Collinder, Business Reporter

President of the Jamaica Bankers Association, Maureen Hayden-Cater, says that while reports generated by credit bureaux are acceptable for personal credit profiles, they will not substitute for audited financials which provide information on the strengths and weaknesses of business borrowers.

Hayden-Cater was responding to a report from the United States Embassy which says that local banks usually request of new overseas investors who wish to borrow locally several years of audited financial statements, which they are generally not able to provide.

The embassy provides advice to investors with an interest in doing business in Jamaica on an annual basis.

Its last report suggested that presence of credit bureaux will reduce several challenges facing foreign investors in the island, including those who have difficulty in getting bank loans because of the requirement for audited statements.

The banks' cautious approach was due to lack of credit reporting and difficulty in collecting on underperforming loans in Jamaica, the report said.

Charles Cleveland, political and economic adviser at the US Embassy, declined to comment further on the challenges faced by US investors. "We have no additional information ... to provide you beyond what is stated in the country commercial climate report," he said.

DUE DILIGENCE HELPS

Megan Deane, chief executive officer of Creditinfo Jamaica, indicates that the due diligence process executed by credit bureaux is expected to help, protecting investors and lenders from entering into deals with shady partners.

However, Hayden-Cater said on Monday that the credit bureau will not be providing information on companies but rather on individuals. "It is not unusual for banks to request audited financials of a company in order to do their due diligence. It appears that a credit report will not be accepted in the place of audited financials," she stated.

Notwithstanding, Deane said that those doing business in Jamaica from other jurisdictions, as well as their local partners, should see benefits from the new reporting process.

Creditinfo is one of two companies approved by the Bank of Jamaica to provide credit background checks. The other is CRIF NM.

"Local credit bureaux are definitely permitted to liaise with credit bureaux abroad to provide information on US-based business creditors or business creditors from other jurisdictions. We have been offering this service to our credit information providers and exporters since July of this year," Deane told Wednesday Business.

"The amount of information in the overseas reports will depend on what is allowed by a particular jurisdiction, but as long as the US applicant provides consent there is usually a significant amount of information that can be provided in a US credit report which would be able to assist the financial

institutions in their customer protocols," Deane added.

Reports may also be generated for individuals, but the Creditinfo head advises that "it is not as clear-cut for individuals because of consent issues. But a US national may certainly instruct one of our bureaux to send a report directly to a potential creditor or provide that institution with the permission for the conduct of a background check."

The Credit Reporting Act 2010 does not currently allow for the sharing of credit information across jurisdictions. However, a consumer can request that their report be sent anywhere, the bureau chief explains.

The credit bureau, Deane adds, can provide reports for the United States market through strategic partners or can do an investigative report. Credit Info, which went live this year, is also able to deliver information from other jurisdictions in which it has partners.

"Where the other jurisdiction is in one of the countries in which Creditinfo operates and there are no legislative hurdles such as requiring consent, credit and business reports can be provided on companies directly from our credit bureau system. If it is a country in which we do not have our own offices, we have global partnerships with other credit bureaux where we can access such reports," she explained.

Information from bureaux outside of Jamaica will not be used to influence local credit scores.

"Our legislation is based on the concept of a closed user group of eligible credit information providers in Jamaica," Deane explained.

avia.collinder@gleanerjm.com

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