NCB welcomes approval for JNBS to become a bank
Group managing director of National Commercial Bank, Patrick Hylton reckons that the commercial banking sector’s newest potential entrant, Jamaica National Building Society (JNBS), might just be the force needed to create a more lucrative industry.
Minister of Finance and Planning Peter Phillips, in a letter to JNBS earlier this month, granted JNBS approval for the conversion from building society to commercial bank in response to a submission made in November 2013. JN first made its application to the Central Bank for a commercial banking licence in 2008 but was denied.
“We have been hearing for some time that Jamaica National had applied for a commercial banking licence, and the prudent thing to do is to expect that they will get it, and like all our other commercial banking competitors we welcome them,” NCB’s Patrick Hylton told the Jamaica Observer on Monday.
The approval of JNBS’s commercial banking licence is expected to bring greater competition to the industry’s largest operators — NBC and the Bank of Nova Scotia — while perhaps diminishing competition in the building society sector. The two banks account for roughly 75 per cent of the sector’s deposits and gross revenue.
But before the conversion is complete, JNBS needs the approval of its members to reorganise its Group into the creation of three new companies — a mutual holding company, a financial holding company and a non-financial holding company — to achieve compliance with the Banking Services Act.
“We feel that they will bring something new to the industry which will make it more interesting, more challenging in some aspects, but also maybe more lucrative because sometimes what you find is that competition brings out the best in us, and at the same time people come with other perspectives and bring different things to the market,” Hylton said.
“We know JN. We have had a relationship with them for a long time we find them to be a very worthy institution that has contributed a lot to national development, and we expect them to do the same in this capacity as well, just as we seek to do the same,” Hylton told the Business Observer.
In responding to news of the approval, JNBS general manager Earl Jarrett said in a statement on the company’s website said that it is a major achievement for the bank, having applied for the licence seven years ago, and is committed to repositioning JN to better serve its members.
He added that the conversion will result in JNBS becoming the third largest commercial bank in Jamaica with 12.8 per cent of the market, behind NCB and Scotiabank with approximately 36 per cent and 26 per cent, respectively.
“The conversion was being undertaken against the background of increased demand from the Society’s members for an expanded range of credit products and services, which building societies cannot legally offer. These product and service offerings include certain types of personal loans and chequing accounts,” Jarrett stated.
“We have therefore been making the necessary operational changes, which must be implemented to make the change possible; and we are ready to reposition Jamaica National to successfully chart another 141 years as a bona fide member of the commercial banking sector,” the general manager said.