COUNTRY PROFILE
Total land area:........................ 10,830 sq. km.
Official languages:.....................English, Creole
Administrative divisions:.......... 14 parishes
Legal system:.......................... Based on English Common
Law; has not accepted
compulsory ICJ jurisdiction.
Executive branch:................... Chief of stateQueen Elizabeth
II (since February 6, 1952),
a hereditary monarch, is represented by a governor general
who is appointed by the queen on the recommendation of
the prime minister. Heads of governmentprime minister
and deputy prime minister, appointed by the governor
general. The cabinet is appointed by the governor general
on the advice of the prime minister.
Legislative branch:................... Bicameral ParliamentSenate
(21-member body
appointed by the governor general) and House of
Representatives (60 seats).
Judicial branch:........................ Supreme Court. Judges
appointed by the governor
general on the advice of the prime minister.
ECONOMIC PROFILE
Currency: Jamaican dollar (J$)
GDP: US$4.2 billion (1997)
Real GDP growth (at market prices): -1.4 (1997)
GDP (average annual growth rate): 1.7 (1988-1997)
GDP per capita (1990 US$): 1,697.9 (1997)
Consumer price index (average annual growth rate): 9.2 % (1997)
Central government fiscal balance (% of current GDP): -6.1 (1997)
Money supply (M1) (% of current GDP): 13.0 (1997)
Interest rate (weighted nominal deposit rate): 15.5 (1997)
Current account balance: -US$0.4035 billion (1997)
Trade balance: -US$1.7 billion (1997)
Main exports: Aluminia (extracted from bauxite ore and used to produce
aluminum), bauxite and concentrates of aluminum, sugar, bananas.
Main imports: Industrial supplies, food, fuel, machinery and transport
equipment.
Nominal exchange rate (J$/US$) end of period: 34.9 (1996)
Real effective exchange rate (Index 1990=100): 128.9 (1997)
BANKING SYSTEM
Total number of banks in the system: 42
Types of banks: 9 commercial banks, 23*merchant banks, 10*building
societies
* two institutions closed, two merged subsequent to June 1998.
Total amount of assets: J$219.2 billion
Total amount of deposits: J$ 152.6 billion
Total amount of capital or net worth: J$ 3.5 billion
Total capital: (adjusted for impairment of intervened institutions):
Commercial banks=J$9.9 billion; merchant banks=J$1.68 billion; building
societies J$ 2.7 billion.
BANKING INSTITUTIONS
I. Banking Supervision
1. The Bank of Jamaica
is responsible for banking supervision.
2. The Bank of Jamaica
is not independent of the government but is free to
exercise its statutory powers within the specific authority granted under
legislation.
3. Certain supervisory
powers rest with the minister of finance, including the
issuance and revocation of banking licenses.
4. By law, on-site
examinations are conducted at a minimum of once a year.
Banks are also subject to continuous off-site monitoring and are required
to submit monthly, quarterly and annual returns to the Supervisor. Included
within these returns are balance sheets, income statements and other
information.
5. Banks are rated
as follows:
Category
Definition
Criteria
1
Excellent
No problems
2
Good
Minor problems
3
Satisfactory
Instances of statutory violations,
operational deficiencies; no
immediate threat to viability,
but could deteriorate
4
Less than satisfactory Statutory
violations, financial
difficulties, viability and solvency
threatened
5
Poor
Major violations, severe financial
difficulties, insolvency imminent
6. The CAMEL system
is used to examine banks.
II. Consolidated Supervision
1. Jamaica is in the
process of enhancing consolidated supervision capabilities.
Recent amendments to legislation allow for full access to books/records
of
holding companies.
2. Prior consent is
required from Jamaica to open or close a branch of a Jamaican
bank in a foreign country.
3. Prior consent is
required from the home country to open or close a foreign
branch in Jamaica.
4. Memoranda of understanding
are signed with host jurisdictions to allow for the
gathering of information from cross-border banking establishments.
III. Interest Rates
1. Interest rates
on loans are determined by the market.
2. Interest rates
on deposits are determined by the market.
IV. Deposit Insurance
1. Deposits are insured
by the Jamaica Deposit Insurance Corporation, which came
into existence on August 31, 1998.
2. Insurance is limited
per account to no more than J$200,000.
V. Trade Finance
1. Legislation does
not distinguish between trade finance and other types of credit
facilities.
2. The risk of trade
finance vehicles is borne solely by the banks.
3. In a liquidation
scenario, foreign banks which are due funds from a Jamaican bank
have legal recourse for recovery under The Companies Act.
4. The banking system
does not make specific provisions or require reserves for
treatment of trade finance obligations during bank liquidations.
VI. Capital Adequacy
1. The minimum capital
required to open a bank is J$80 million for commercial banks
and J$25 million for merchant banks and building societies.
2. Capital should
not be less than 10% risk-weighted assets. This requirement is
currently being implemented and will be fully effective by December 31,
1999
for commercial banks, merchant banks and building societies.
3. There is currently
no rating system for capital adequacy, but the following is
proposed:
Risk Ratio
Well-capitalized
Over 12%
Adequately capitalized
8%-12%
Poorly capitalized
Under 8%
VII. Asset Quality
1. Loans are classified as follows:
Loan Classification
% of Reserves
Standard
no specific reserves
Special mention
no specific reserves
Substandard
100% of outstanding amounts less
net realizable value of collateral
Doubtful
100% of outstanding amounts less net
realizable value of collateral
Loss
100% of outstanding amounts less
net realizable value of collateral
2. The minimum reserve
requirements on bank assets are 1% general provision for
loss against all loans not attracting a specific loan loss provision.
3. Legal lending limits
are as follows:
Single
Group of Connected
Parties
Customer Related
Customers
With collateral
20%
40%
20%
Without collateral
5%
10%
0%
4. The investment portfolio
is not required to be categorized according to criteria
such as hold-to-maturity, available-for-sale or trade portfolio.
5. Investment categories
are not applicable.
6. The valuation of
the investment portfolio does not affect the profit and loss
statement.
VIII. Liabilities
1. Minimum reserve
requirements are as follows:
Domestic Currency
Foreign Currency
Requirements %
Requirements %
Commercial Banks
Cash reserves *
23
20
Liquid assets *
45
40
Merchant banks
Cash reserves
17
17
Liquid assets
35
35
Building societies
Cash reserves
** 1/12
1/12
Liquid assets **
5/15
5/15
Notes: Cash reserves are
a component of the overall liquid assets requirement.
Therefore, the differential between the cash reserve ratio and the liquid
assets
ratio represents the percentage that must be maintained in other eligible
liquid assets.
* Requirements for commercial banks are being reduced on a phased
basis to 17% for cash reserves and 35% for total liquid assets.
**Requirements for building societies are being increased on a phased basis
to 17% for cash reserves and 35% for total liquid assets. The requirements
are differentially applied to societies not meeting a prescribed threshold
of
residential mortgage lending in relation to savings funds.
Societies meeting
the prescribed threshold maintain 1% in cash reserves and 5% in liquid
assets.
2. Demand, savings
and time deposits can be offered in both local and foreign currency.
3. Total deposits
and borrowings are not to exceed 25 times the capital base in the
case of commercial banks, and 20 times for merchant banks and building
societies.
4. There are no legal
limits on deposit concentrations; however, banks are discouraged
from maintaining high customer concentrations.