THE Jamaica National Group Limited (JN Group) is dismantling non-core and loss-making businesses to restore capital and refocus on JN Bank Limited after four consecutive years of consolidated losses, a strategy its chief executive likened to selling stored reserves in preparation for lean times.

“Our investment in these assets was our approach to preparing ourselves for seven years of famine,” JN Group Chief Executive Officer Earl Jarrett told members at the group’s eighth annual general meeting on Tuesday. “By virtue of having these assets, we are now able to sell them to restore the capital we have in JN, refocus on JN Bank as the flagship entity, and ensure that the businesses going forward are properly capitalised.”

The biblical analogy, drawn from the story of Joseph in Genesis, framed a sober assessment of the group’s recent history as one marked by an ambitious expansion phase that strained capital, culminated in a failed overseas banking venture, and ultimately forced JN to retreat under tighter regulation and intensifying competition at home.

At the centre of JN Group’s difficulties was JN Bank UK Limited, a bank launched in October 2020 as part of a strategy to address correspondent banking risk and expand access to financial services for under-banked customers. Correspondent banking allows local institutions to process international payments through larger foreign banks, but Caribbean lenders have faced the loss or restriction of these relationships in recent years due to heightened global compliance costs and stricter anti-money laundering rules. By establishing a regulated banking presence in the United Kingdom, JN sought to secure more reliable access to international payment channels while serving Caribbean nationals abroad.

The venture never generated profits and instead required repeated capital injections from the Jamaican group to meet regulatory requirements. According to Jarrett, JN Group spent more than £50 million (US$68.97 million) on the UK operation. JN Bank UK reported losses of £12.69 million (approximately J$2.34 billion) in the March 2023 financial year and a further £11.02 million (J$2.09 billion) in March 2024. Those losses flowed through to the group’s consolidated results, with JN Group posting net losses of J$2.54 billion in the March 2024 financial year and J$2.53 billion in March 2025, extending a four-year run of red ink.

“We had to get additional funding to provide regulators in the UK with assurance that we could achieve a solvent wind-down of the bank,” Jarrett said. “But as life would have it, we found a buyer — and he’s happy now.”

In September 2024, JN Financial Group Limited (JNFG) sold 80.1 per cent of its stake in JN Bank UK to Step One Money UK Limited for £20 million. Following two subsequent capital injections by the buyer, JNFG’s ownership has been diluted to 6.37 per cent, leaving the group with only a minor economic interest in the rebranded entity, now called This Bank Limited. Jarrett said the UK bank is now reporting a profit, though JN’s share amounts to only about six per cent. “It vindicates the idea,” he said, “but the timing was wrong.”

Selling reserves to restore capital

The UK exit was only the most visible part of a broader effort to convert accumulated assets into capital as regulatory pressure mounted at home. The Bank of Jamaica (BOJ) imposed stricter capital adequacy ratio (CAR) requirements on JN Bank Limited — formerly JN Building Society and the core of the member-owned group — forcing JN to reassess its balance-sheet structure and risk profile.

The CAR measures a bank’s capital as a percentage of its risk-weighted assets and is designed to ensure institutions can absorb losses during periods of stress. JN Bank was required to hold a higher ratio than some peers due to its business model, scale and recent financial performance, constraining the level of risk it could take on through lending and investment.

To rebuild capital, JNFG sold JN General Insurance Company Limited in June 2025 to British Caribbean Insurance Company Limited (BCIC) and ICD Group Holdings Limited. Earlier this year, on January 23, JNFG completed the sale of JN Fund Managers Limited (JNFM) to Barita Investments Limited, which has since appointed Richardo Williams as interim chief executive.

Jarrett said the group has also moved to reduce expensive debt. JN Group borrowed US$8 million in May 2024 at an interest rate of 12.35 per cent, with the loan scheduled to mature in March 2026. He said the group has advised Jamaica Money Market Brokers Limited (trading as JMMB Investments) that it intends to prepay the outstanding balance using proceeds from the JNFM sale.

Narrower group, tighter risk appetite

Following the disposals, JN Financial Group is now concentrated on commercial banking, life insurance and money services in Jamaica, along with JN Cayman, which operates as a mortgage lending business. Jarrett said a newly registered entity, N.E.M. Insurance & Risk Agency 2025 Limited, will allow the group to distribute general insurance products as an agent, without taking underwriting risk on its own balance sheet.

Asked who bore responsibility for the losses that forced the group into retreat, Jarrett resisted singling out individuals.

“It’s not a who,” he said. “Yes, indeed, we had some issues with some of the companies and the management, which we have dealt with, but the external environment was also a significant contributor.”

He pointed to under-reserving at JN General Insurance, where a surge in motor claims exposed weaknesses in pricing and claims assumptions, as well as losses at JN Fund Managers linked to investments in Mexican and Trinidadian entities that underperformed expectations. Together, he said, those experiences highlighted a broader misalignment between the group’s risk appetite and its capital base, reinforcing the need for tighter oversight, more conservative assumptions and clearer limits on concentration risk.

“One of the good lessons learnt here is that we have to adjust our risk appetite,” Jarrett said, adding that JN Group is establishing a more robust risk management committee supported by overseas specialists. The goal, he said, is to better manage credit, market and concentration risks — including exposure to Government of Jamaica bonds — without undermining capital.

Constraints remain despite rebuilding effort

While the asset sales have helped to stabilise the balance sheet, JN Group’s rebuilding effort remains constrained by regulation and competition.

In February 2025, the BOJ reduced JN Bank’s minimum CAR requirement from 15 per cent to 13 per cent. JN Bank met that threshold with a 13 per cent CAR in March 2025, but the higher regulatory floor still limits how much risk the bank can take on in its lending and capital allocation.

By comparison, National Commercial Bank Jamaica Limited (NCBJ), the country’s largest commercial bank and a systemically important institution, faces a 12.50 per cent CAR requirement and reported a CAR of 14.77 per cent in September 2025, giving it greater headroom to expand.

At the same time, JN’s traditional mortgage business has lost ground to Bank of Nova Scotia Jamaica Limited, which has emerged as the largest player by offering cheaper rates and a broader suite of services across its group. Jarrett acknowledged the pressure and said he hoped reports of a possible deferral of new Basel III capital standards would prove accurate, underscoring the sensitivity of JN’s strategy to regulatory developments.

Early signs of relief

Jarrett said there are early signs that the group’s austerity phase is easing. JN Bank’s profitability improved up to December 2025, and the group’s consolidated net loss narrowed from $4 billion to $1.2 billion over the nine-month period ending December 31.

He also sought to reassure members about the impact of Hurricane Melissa on the mortgage portfolio, noting that affected properties are insured and borrowers have largely continued to make payments, despite the continued closure of the Santa Cruz and Catherine Hall branches.

For Jarrett, who is preparing to mark his 29th year as chief executive, the story he offered members was one of survival rather than expansion, with assets accumulated during better years sold off to protect the institution during leaner ones.

Whether JN Group has sold enough of its “fat years” reserves to carry it through the next phase will depend on its ability to convert tighter risk controls, heavy technology investment, and a narrower business model into sustainable profits at a time when regulation is unforgiving and competition is intensifying.