JMMB reveals 2018 as timeline for commercial bank

BY STEVEN JACKSON Business reporter jacksons@jamaicaobserver.com

Friday, September 18, 2015

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JAMAICA Money Market Brokers (JMMB) Group announced that it aims to acquire a commercial banking licence by 2018 despite failed attempts seven years ago.


Concurrently the group got shareholder approval to allow up to six billion new preference shares for issue and/or allotment whenever the group deems it necessary. It was done as a proactive step to allow the group to quickly offer preference shares to the market to finance any potential acquisition.


JMMB's clients total 220,000 across its regional operations and the commercial bank in Jamaica would represent a key licence to leverage increased services and earnings.


"When is JMMB going to have a commercial bank in Jamaica? Of course that is in our three-year plan," reasoned JMMB chief executive officer (CEO) Keith Duncan in his comments following presentations by regional managers at the investor briefing held at the Jamaica Pegasus hotel in Kingston on Wednesday. The Bank of Jamaica (BOJ) which regulates the industry denied JMMB an application for a commercial banking licence in around 2008. Three years ago, Duncan told this reporter that the group would renew its application amid acquiring the Capital & Credit Financial Group which it rebranded a year later. It was not immediately clear whether the group made a formal attempt since that time. However, Duncan again sounded the charge on Wednesday.


"We think we are ready and we will be starting that process to ensure that JMMB can compete with the big boys -- David and Goliath. And as Nigel says, we have the sling," added Duncan.


The Bank of Nova Scotia and National Commercial Bank of Jamaica are the largest commercial banks in the island followed by Sagicor Bank Jamaica, CIBC FirstCaribbean Bank and First Global Bank. The BOJ also lists Citibank -- as it began operations in Jamaica as a commercial bank with eight branches in 1960, even though it later focused on corporate banking.


Currently, there are calls for increased competition from consumers who are hurt by relatively high lending rates and fees.


JMMB indicates that operating a commercial bank would effectively allow it to lend at cheaper rates than it currently can offer to the market.


"That is why we are striving to get a commercial banking licence," stated Archibald Campbell, group deputy chairman, in response to a query on its loans.


When JMMB acquired the CCFG group in 2012, the merchant banking arm held some $3.2 billion in non-performing loans which affected its $6.3 billion loan portfolio. These bad debts were largely sanitised upon acquisition and also in the ensuing months. On Wednesday, Duncan commended the management team at the group's subsidiary JMMB Merchant Bank for reducing the non-performing loans to "one per cent" of total loans.


In previous years Duncan argued that JMMB should be allowed to expand its banking presence in Jamaica in tandem with its successful banking operations in Trinidad and the Dominican Republic.


JMMB group made $2 billion in net profit after tax on $10.3 billion in revenues net of interest expense for its March 2015 year end or one-third less net profit than the prior year.



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