JMMB Group Limited (JMMBGL) has completed its group restructuring to separate its Jamaican regulated financial subsidiaries from its non-regulated subsidiaries as it awaits licensing from the Bank of Jamaica (BOJ) for its financial holding company (FHC) subsidiary.

This was done pursuant to the Banking Services Act (BSA) of 2014 which gives the BOJ consolidated supervision of financial entities within a group that includes a deposit-taking institution (DTI). The restructuring was done through its new subsidiary JMMB Financial Holdings Limited (JMMBFH) following the receipt of a non-objection by the BOJ.

As a result, JMMBFH is now the direct parent company of JMMB Bank (Jamaica) Limited, JMMB Money Transfer Limited, Jamaica Money Market Brokers Limited (JMMB) and its wholly owned subsidiaries JMMB Insurance Brokers Limited, JMMB Securities Limited and JMMB Fund Managers Limited. This has also resulted in the ownership of JMMB Real Estate Holdings Limited and Capital and Credit Securities Limited being shifted from JMMB Limited to JMMB Group.

The JMMB disclosure noted that the restructuring exercise is aimed at harmonising the group’s overall corporate structure for its local and overseas holdings. JMMBFH has applied to the BOJ to be licensed as a FHC pursuant to the BSA 2014. JMMB Group’s subsidiary JMMB International Limited, which directly owns the 23.33 per cent stake in Sagicor Financial Company Limited, was listed in its 2022 annual report as a company to be regulated in the future by the Barbados Financial Services Commission.

“The group continues to work with regulators in Jamaica and overseas as it pursues the restructuring exercise in respect of its overseas companies and will provide further updates as appropriate to our stakeholders of the outcome of this exercise,” said the release signed by group corporate secretary Carolyn DaCosta.

JMMB Group is the latest financial conglomerate with a DTI subsidiary to restructure its corporate setup to facilitate a FHC and separate its non-financial subsidiaries. This comes in light of the BOJ’s statement on the licensing of FHC’s which revealed that only JN Financial Group Limited and NCB Financial Group Limited are the sole licensed FHCs to date.

FHCs allow for consolidated supervision by the BOJ which is set to become the prudential regulator for the entire financial industry over the next two years. Any company intending to function as a FHC is required to apply to the BOJ supervisory committee which is chaired by BOJ Governor Richard Byles.

“Bank of Jamaica (the Bank), as part of its commitment to strengthening the regulatory framework for financial institutions, has embarked on the licensing of Financial Holding Companies (FHCs) under the Banking Services Act (BSA) 2014 to improve consolidated supervision of financial groups. This is in light of the growth of financial conglomerates in Jamaica. The Bank does not automatically issue a Financial Holding Company licence following the issuance of the non-objection to group reorganisation,” the BOJ said in its release.

The latest entity to execute a group reorganisation is the Victoria Mutual Building Society (VMBS). As a result, VM Group Limited was formed as a mutual holding company with VM Financial Group Limited being a FHC holding the financial services subsidiaries and VM Innovations Limited as the non-financial holding company for the other subsidiaries. This resulted in its 80 per cent controlled listed subsidiary Victoria Mutual Investments Limited parent company shifting from VMBS to the VM Financial Group.

The BOJ gave its non-objection on March 10 to Cornerstone United Jamaica Holdings Limited (CUHJ) for its proposed reorganisation of the Cornerstone group of companies. CUHJ is the parent company of Cornerstone Trust & Merchant Bank Limited (CTMB), Jamaica’s sole merchant bank.

As a result of the BOJ’s non-objection, Cornerstone Financial Holdings Limited (CFHL) will assume the assets and liabilities of CUHJ which will result in the shares held in CTMB and Cornerstone USA being transferred to CFHL. A new FHC will be created and issue shares at a later date to CFHL for its shares in CTMB and Barita Investments Limited which will become the direct parent of both companies.

This process will require a court-sanctioned scheme of reorganisation which will see shareholders of both companies voting on the scheme. If the process is completed, Barita would be delisted from the Jamaica Stock Exchange (JSE) with the Cornerstone FHC being listed in its place.

GraceKennedy Limited is the other firm currently restructuring to create a FHC despite its core financial subsidiary GraceKennedy Financial Group Limited (GKFG) currently owning most financial businesses in the GK group. GK owns First Global Bank Limited through First Global Holdings Limited which also owns GK Capital Management Limited and GraceKennedy Properties Limited. However, First Global Holdings is directly owned by GK with other non-Jamaican subsidiaries owned by the GK Financial Group.

Except for FirstCaribbean International Bank (Jamaica) Limited and Citibank, NA, the other licensed DTIs are currently held as wholly owned subsidiaries of a parent holding company.