National Investment Bank of Jamaica owes the Development Bank of Jamaica (DBJ) a near $1.7 billion, but the merged bank was tight-lipped on how the debt would be treated now that the two state entities have combined operations.

Wayne Whittingham, acting head of the DBJ, whose agency prior to the merger pre-dominantly wholesaled loans for projects via 'approved financial institutions' (AFI) and the People's Cooperative Banks, said NIBJ had been one of its AFIs.

The merged state bodies, whose combined assets amount to $37 billion, will continue to sell loans, said Whittingham, but he was unforthcoming on whether the NIBJ's mode of operation - direct project lending - would continue with the same criteria for loan disbursals as it did prior to September 1.

The NIBJ's programmes of equity investment and divestments remain intact, however, Whittingham told Finacial Gleaner. The investment bank was projected to invest $1.14 billion in development projects this year, 75 per cent of which is slated for manufacturing/agro-processing businesses, while the other 25 per cent is earmarked for services, information technology and other sectors.

The investment bank had liabilities in excess of $7 billion projected for this financial year, according to finance ministry figures, covered by assets of more than $12 billion, largely com-prising short term investments as well as holdings of shares and other deposits.

Equity stake

The 'shares' would refer to the equity stake that NIBJ takes in some businesses and projects, for example, its one-third ownership of the controversial Sandals Whitehouse.

The $1.64 billion owed to DBJ is more than a fifth of the develop-ment bank's $7.3 billion portfolio of loans to its AFIs, and 12 per cent of the total portfolio of $13.5 billion, according to figures published by the finance ministry in April.

The portfolio includes a near $5 billion of financing for government programmes and infrastructure projects, $822 million for lending through PC Banks, and $480 million for direct lending.

Finance Minister Dr. Omar Davies is to name a new board for the merged operation, Whittingham said, but has not indicated when. For now, oversight is provided by the old DBJ board, chaired by Rita Humphries-Lewin.

DBJ will continue its lending programme, said the agency head, noting that last year its loans topped $2 billion.

The finance ministry had forecast loans this financial year of $1.48 billion by the development bank, but Whittingham said it would likely be more, adding that the NIBJ portfolio also remained intact.

- lavern.clarke@gleanerjm.com