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FirstCaribbean allays confidentiality fears

Oct 13, 2006

FirstCaribbean International Bank (FCIB Jamaica) is currently engaged in ongoing investigations into possible breaches of customer confidentiality rights pertaining to the Trafigura affair, and is assuring customers and the banking community at large that the bank is sound.

Speaking with Caribbean Business Report earlier this week, FirstCaribbean's Managing Director Milton Brady said: "We are currently conducting an ongoing investigaton into breaches of customers' confidentiality rights. It is well documented that we did send a senior executive on leave in relation to this matter while we conduct a thorough investigation. I must stress here that though nothing illegal may have been done, an employee may well be censured if our own internal code of conduct rules are breached".

Brady went on to explain that though the Banking Act is very specific concerning customer confidentiality, FirstCaribbean's internal governance framework is very robust and perhaps more stringent than the Act. He added that breaches incurred stiff penalties.

Earlier this week the Jamaica Bankers Association (JBA) headed by Bill Clarke pointed out that "the Banking Act imposes on every bank employee a duty of confidentiality in relation to any information regarding the money or other relevant particulars of the accounts of customers".

The Banking Act does have exceptions which allow some form of disclosure.
These are:
1. Where customers give written consent.
2.When it is ordered by the courts via a directive given by the Ministry of Finance.
3.When the Money Laundering or Terrorism Preventions Acts require that disclosures be made.

Customer confidentiality is the lynchpin of banking and this incident has put the entire Jamaican banking community under the spotlight. Indeed, The Jamaica Manufacturers Association (JMA) headed by Doreen Frankson issued a statement earlier this week which read: "The JMA is extremely concerned about the fact, that banker-customer confidentiality seems no longer sacrosanct. In fact the confidence between banker and customer is a very important element of being able to conduct business".

This contentious issue, which forced the resignation of the Minister of Information and Development Colin Campbell, centres around leaked information that an account named CCOC (acronym for Colin Campbell Our Candidate) operated by the People's National Party (PNP) received $31 million from the Dutch oil and commodities trader, Trafigura. It appears that the account was held at FCIB (Jamaica).

There is widespread speculation that both FirstCaribbean and the PNP are in talks to resolve this issue and stave off a potential lawsuit. Yesterday Brady would not confirm or deny this, but reiterated that an ongoing investigation was taking place and that while that was the case it would be inappropriate for him to comment.
But while dealing with confidentiality issues, Brady has to contend with speculation that customers are pulling their accounts as a result of this incident.
"FirstCaribbean, then CIBC, has operated in Jamaica for the last 86 years and this incident, which is an isolated one is the first of its kind during this time. We firmly observe both the letter and spirit of corporate governance and customer confidentiality and any employee found breaching those will be dealt with appropriately.

" We have an "A-" rating from Standard & Poor's which is higher than many Caribbean countries. We are the fastest-growing bank in Jamaica. Our loan portfolio grew by 80 per cent over the last year. The industry as a whole grew by just 12 per cent."

Brady is credited with doing a very good job with the bank. At July 05 the loan portfolio stood at J$11.7 billion. At July 06 it jumped to J$21.1billion.This represents a growth by J$9.4 billion (80 per cent).

Jamaican commercial banks combined together had a loan portfolio of J$122.7 billion in June 05. In June 06 that increased to J$137.4 billion, a growth of J$14.7 billion.

For the third quarter of 2005 FCIB(Jamaica) posted a pre-tax profit of J$426 million, which included a one-time gain of J$135 million (the sale of a subsidiary). For the same period this year that figure had risen to J$678 million.

The bank's parent resides in Barbados and has assets of US$10.8 billion and equity of US$1.2 billion. Jamaica's entire commercial banking sector has assets of US$6.2 billion with equity of just US$750 million.

Brady points to an independent survey conducted by a Trinidadian firm in April of this year. Done on a country-by-country basis it found that FCIB (Jamaica) was number one for customer service, value for money and brand image among the banking community in Jamaica. Out of nine criteria it was number one in seven criteria.

Back in the mid-90s when the local banking sector was experiencing a meltdown and FINSAC was called in, we were not affected largely because of our compliance procedures and people ought to know that," said Brady.

For the year-to-date financial sector stocks have registered a minus 26 per cent change. FCIB (Jamaica) is the only one to show a gain which is 5.5 per cent.

"We are doing everything we possibly can to resolve this matter and would like to assure not just our customers but the entire country that our bank employs sound policies and takes very seriously breaches of customer confidentiality."


The Jamaica Business Observer
Al Edwards
Friday, October 13, 2006



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