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NCB Capital Markets ready to take on Dominican Republic

Published:Friday | December 11, 2015 | 12:00 AM
Steven Gooden, CEO of NCB Capital Markets Limited.

NCB Capital Markets ready to take on Dominican Republic

Steven Jackson

Senior Business Reporter

Financial outfit NCB Capital Markets Limited plans to enter Dominican Republic in 2016, which would fortify its expansion into the fastest growth market in the Caribbean.

The company entered Barbados in recent months, but Dom Rep would represent its largest territorial entry. It forms part of the growth strategy of the company, which currently earns the bulk of its profits from Jamaica.

"We have invested time and resources to better understand the market over the past year. Based on where we are now, we expect to be in the Dom Rep by the end of the financial year, subject to receiving all the requisite regulatory approvals," said NCB Cap Markets CEO Steven Gooden.

Gooden's confirmation follows pronouncements by NCB Group Managing Director Patrick Hylton in November that the banking group's wealth arm would be testing its feet in other markets.

Dom Rep grew 6.4 per cent during the first two quarters of 2015 compared to the same period a year earlier, with projections that growth will settle at six per cent by year end 2015, according to that country's central bank. Its inflation rate, at some 1.1 per cent up to July, trails its annual target of four per cent. Additionally, the central bank anticipates that the current account should close around negative two per cent of GDP, for the year, the lowest in a decade.

Gooden reasoned that a growing economy, "all things being equal", suggests that consumption should drive the demand for more goods and services and, as such, businesses will want to avail themselves of financing to expand to meet the increased demand. As a consequence, more wealth will be created for individuals and institutional investors, which means more wealth to manage, he philosophised.

"When you combine this with the fact that the population in Dom Rep is three times that of Jamaica, and that product penetration is growing but still low, it means the market is very scalable. This augurs well for the success of an investment house like ours that specialises in financing and wealth management," he added.

The brokerage will be joining at least one other Jamaican securities dealer in that market, JMMB Group, which entered Dom Rep in 2006 as a securities dealer. It currently operates in two locations in that country. Subsequently, in 2013 JMMB, through acquisition, gained control of the shares in a commercial bank in that market. Incidentally, NCB group owns 26.3 per cent of JMMB via NCB Cap Markets.

No other large-scale Jamaican financial entity operates in Dom Rep.

NCB Cap Markets announced its expansion into Barbados in September with a US$2.5-million capital injection. The company was incorporated in Barbados in May but in later months received regulatory approval to operate. It also operates in the Cayman Islands as NCB Capital Markets Cayman, and in Trinidad & Tobago through its acquisition of AIC Finance, now NCB Global Finance Limited.

NCB Cap Markets expects to differentiate itself from the competition by leveraging its own expertise along with the size and agility of its larger parent, NCB group, which holds $88.4 billion in equity as at September 2015. The company, however, continues to mull whether to acquire an existing player in the Dom Rep market or set up its operations from scratch.

"The entry is dependent on the opportunities available to us. Generally speaking, an acquisition would be a preferred route; however, one has to be comfortable with the target entity and pricing. We are comfortable with either option. We entered Trinidad via an acquisition, and entered Barbados and Cayman via greenfield investments," he said, adding that for now the company remains mum on revealing its initial capital outlay for that market.

The regulatory minimum is RD$45 million (US$1 million), Gooden indicated.

NCB group had $12.3 billion in net profit on $25.9 billion in net interest income over the year ending September 2015. The wealth, asset management and investment banking arm, which comprises NCB Cap Markets, made $3.6 billion in operating profit on $9.3 billion in total revenue.