JN setting up commercial bank in UK and Cayman

Withdrawal of correspondent banking drives move

BY DURRANT PATE
Observer business writer

Friday, November 22, 2019

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Owing to the mounting operational cost from the withdrawal of correspondent banking relations, The Jamaica National Group is seeking to establish a commercial banking arm in the United Kingdom. The JN Group CEO said the organisation will also be reviewing the feasibility of establishing a bank in the Cayman Islands.

JN Group Chief Executive Officer Earl Jarrett, who made the announcement at the group's annual general meeting (AGM) at the Jamaica Pegasus Hotel in New Kingston on Wednesday, emphasised that “The correspondent banking crisis has significantly increased our cost of operations. For example JN Money Services experienced a 42 per cent increase in banking costs in the UK over four years, while in the Cayman Islands, the cost rose by over 1,000 per cent over the past five years.”

He explained that JN spent an alarming 2.4 million and Caymanian $2.1 million, since it lost correspondent banking services in both markets, while applying very limited increases in their transaction fees.

According to Jarrett, while the cost from the withdrawal of correspondent banking relations was heavy, JN sought not to pass on the cost to its customers in these two markets. In the case of JN Money Services in Cayman, Jarrett argued, “The cost could not be passed on, as it would make the remittance entity uncompetitive.”

In the case of JN in the UK, Jarrett pointed out that the institution had to find innovative ways to manage the challenges the correspondent banking crisis presented, where their banking accounts with these entities, which they have been operating with for years, were literally closed overnight. As part of its expansion thrust, JN has been pursuing the establishment of a commercial bank in the UK given the fact that it could no longer rely on overseas banks for correspondent banking relations.

ESTABLISING JN UK BANK

Jarrett told the AGM that the process of setting up this Jamaican Bank, the first Caribbean bank to be established in the UK, is far advanced. He disclosed that UK banking regulators will shortly be arriving in the island to conclude discussions, leading to the issuing of a UK banking licence to JN.

The UK banking regulators will also be scrutinising JN banking operations, as part of its due diligence in granting a banking licence to the Jamaican financial conglomerate.

The anticipated start-up of the commercial bank in the UK is the first quarter of next year, where it will offer banking services to the Caribbean Diaspora and the wider customer base of Caribbean people in the UK.

Over time JN UK bank will offer savings and deposit and loan products to the wider UK market.

The bank, which will be based in Brixton, London, will start small offering savings and unsecured loans to Caribbean nationals before moving onto small business loans. It will be technologically driven, offering mobile banking services and will not be handling much cash initially.


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