Sun | Feb 18, 2018

JNBS members vote for commercial bank

Published:Wednesday | November 16, 2016 | 12:00 AM
Harry Bhoorasingh casts his ballot at the special general meeting of the Jamaica National Building Society held at the Jamaica Conference Centre in Kingston on Monday, November 14, 2016. Looking on are Martin Gooden (left) and Onyka Barrett (right).

Members of the Jamaica National Building Society (JNBS) voted their approval of the plan for the mortgage institution to transform into a commercial bank, a conversion that is expected to take effect by January.

More than 23,000 members voted in favour of the transition, while even more of them, over 24,000, approved the adoption of the new scheme of arrangements for the overarching group at a special general meeting on Monday in Kingston.

It is the last big hurdle for the society, coming a year after the central bank finally signed off on the banking licence that it had chased for more than seven years.

JNBS will next report back to the Supreme Court for its final approval of its reorganisation plan, Chairman Oliver Clarke said.

Although the vote was favourable, it was prefaced by a lengthy question and answer period in which shareholders sought assurances that they would be protected from "the exorbitant fees" that are common place at the other commercial banks.

The new JN Bank will become the third largest of seven banks on its transition.

"We don't intend to copy the banks in high fees," Clarke assured them.

"In the last few days, one of the banks has announced profits that are many, many multiples of what Jamaica National earns. You only make that by charging high fees and by careful use of the treasury. We hope not to emulate that," he said.

It was a reference to National Commercial Bank Jamaica, which last week reported net profit of $14.4 billion, its highest on record. A big contributor to NCB's earnings came from a net $11 billion of fees and commission income.

Clarke told shareholders that by virtue of the retention of their ownership of the overarching holding company for the restricted JN group, they can hold the directors accountable.

Jamaica National does not have "as its first objective the maximisation of profits; it seeks to maximise the benefits that its members get from the organisation," the chairman said.


He also told the JNBS members that there are no plans to take the bank or its holding company public, saying that if JN Bank were to list on the "I guess that within six months it would be foreign owned", whereas the directors want ownership to remain in local hands.

Maureen Hayden-Cater will head JN Bank. She is currently an executive with JNBS, which she joined after leaving the GraceKennedy group, where she headed First Global Bank.

At Monday's meeting, Hayden-Cater said JN Bank has already started picking up traction through a number of services it has launched, including credit cards and car loans.

Under the new scheme of arrangements, the 142-year-old JNBS will remain a mutual organisation, continuing the ownership by its members, which will be preserved in a new mutual holding company. That holding company will own all the entities in the overarching JN Group.

The new structure will include a non-financial holding company to be chaired by Dr Dhiru Tanna, the deputy chairman of JNBS.

Five JNBS subsidiaries, two associated companies and a related company, Transaction E-Pins, will fall under the non-financial holding company. Subsidiary company Manufacturers Credit and Information Services Limited (MCIS) will be merged with Jamaica Automobile Association to form a new entity called JAA (Services) Limited. MCIS provides fleet management services through its Advance card.

The credit portion of MCIS's business will be absorbed into the bank's operations, JN said.

Clarke will continue as chairman of the overall group, and will also chair the financial group and the bank.

JNBS General Manager Earl Jarrett will continue to head the financial group, under which 11 subsidiaries fall.