Faced with jump in bank fees, Broilers urges shareholders to go electronic

BY STEVEN JACKSON Business reporter

Wednesday, December 18, 2013    

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A spike in bank fees will pluck away millions from Jamaica Broilers Group (JB), unless investors allow the poultry and ethanol producer to send dividends electronically.

It's one of the first listed companies to react to a November 1 increase in bank fees that will result in it paying over $3 million for cheques issued to its 16,000 shareholders on each payment date.

That bank fee, however, could jump from some $3 million to over $12 million with dividends paid quarterly.

JB will refrain from lobbying its bank — National Commercial Bank Jamaica (NCB) — to revoke the fees.

Instead, the group issued a December dated appeal to its shareholders to allow it to enact direct deposits thereby reducing the cost some 95 per cent.

However, shareholders must individually agree to allow JB to enact direct deposits.

"As a matter of course we like to minimise expenses and when we see a potential expense of $3.1 million we are looking at ways of mitigating or avoiding same," said Don Patterson vice-president in charge of accounts and information systems at JB in a phone interview with the Observer on Monday. "So we have identified that if the dividend payments are transferred electronically to shareholders there is a minimal cost."

Direct deposit will cost the company roughly $10 per transaction compared with $200 via cheque to shareholders. Prior to November the cost to do that transaction was nil, according to Patterson.

"So what we are communicating to our shareholders is that we would like them to prepare the bank mandate to allow us to transfer directly to the bank account. This would save the company a significant amount of money and would be convenient for them," he said, adding that the account holder would also avoid a separate deposit fee.

JB earned $300.7 million net profit for six months ending October 2013 on $14.5 billion in revenues.

The group's divisions include Best Dressed Foods division which mainly produces poultry; HIPRO-ACE division which mainly manufactures feeds, sells baby chicks and other farm supplies; Ethanol division which processes fuel-grade ethanol for sale; and its US Operations which produces eggs and provides services in North America.

Shareholders currently receive dividend cheques with an adjoining stub. Those who accept bank mandate will see money in their accounts and receive a subsequent stub.

"We are looking at efficiency to assist our shareholders and to cut costs," said Patterson. "A number of shareholders have already filled out these mandates...We are encouraging more and more shareholders to fill out the mandate so that more efficiencies can be extended to [them]."

The Bank of Jamaica (BOJ) is compiling a report on bank fee fluctuations as an interim report requested by Parliament. Some members of Parliament are concerned that banks increased fees to compensate for a fall in revenue due to the debt swap. A government committee will meet to evaluate the BOJ report and make recommendations to the House on steps to possibly regulate fees which are currently market-determined.

"So the whole issue of bank charges and the ramifications of those charges are manifold," he philosophised, whilst declining to comment on the politics surrounding bank fees. "What is happening is that the imposition of these bank charges is forcing many companies operating bank accounts to move to electronic transactions," he said.





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