JNBS sticks with mutual status
THE banking licence sought by Jamaica National Building Society (JNBS) is not a sign that it wants to give up mutual ownership, says its boss.
Earl Jarrett, the general manager of JNBS, said the company is working on a renewed request for a commercial banking licence, which it will submit to the central bank.
The building society has been asking the Bank of Jamaica for a licence since 2009.
But that doesn't mean that it will follow in the footsteps of the many British building societies that became banks in the 1990s in a much-criticised process called demutualisation.
"A banking licence doesn't necessarily mean we will become demutualised," Jarrett said.
JNBS is just looking to offer banking services within its group, he said: "We are limited with some of our products. Customers want credit card services and chequing accounts."
Jarrett said that building societies in Jamaica cannot offer some banking services like those in the UK.
Nationwide Building Society in the UK, one of the few that did not demutualise, offers credit cards to its customers.
A senior advisor at UK's Financial Services Authority said true building societies have no reason to become banks.
"Building societies should continue to add new products for their customers and not become demutualised" said John Sutherland.
Building societies began in Britain in the 18th century as a way for savers to help borrowers build homes. People with savings accounts or mortgages were members and together owned the institution.
Commercial banks, by contrast, are owned by shareholders.
Sutherland believes the demutualisation wave in Britain was a failure because the new corporations neglected their customers and offered poor interest rates.
"They forgot they existed to look after their customers," he said.
If building societies don't stick to the core values of mutuality, their customers will go elsewhere, he said.
Making money isn't an issue for building societies, Sutherland said. Building societies offer many of the same products as commercial banks, such as savings accounts, he said, and this will suffice along with diversified