FirstCaribbean Jamaica has got a US$70-million injection of capital from its parent, which the local bank has indicated will be used for a more aggressive play for market share and other expansion plans.
CIBC FirstCaribbean International Bank, which is based in Barbados, announced the injection on Monday.
"This capital injection signals CIBC FirstCaribbean's commitment to grow its business in Jamaica," said the regional bank. FirstCaribbean Jamaica is the fourth largest of seven banking groups.
On Tuesday, the head of the Jamaican country operation, Nigel Holness, told Wednesday Business that he has already received the funds.
"The funds are already in so at the next report published by the central bank, you will see an increase in our capital. So definitely, the asset base of the bank will increase and that should take us in the number three spot," he said.
The Bank of Jamaica reported that the commercial bank held J$5.7 billion of capital in June.
stronger tier-one capital
Holness said the US$70 million, which is equivalent to J$7.1 billion, will help the bank strengthen its tier-one capital.
"It will increase the bank's capital so we can lend more to our larger corporate clients and it will also help us with our expansion of the branch network and ABMs across the country," Holness said.
FirstCaribbean Jamaica operates a network of 13 branches. The bank offers services ranging from corporate and investment banking, treasury sales and trading, retail banking, wealth management, small business and credit cards.
Only recently, in August, the company surrendered its building society licence, but still offers mortgage loan products from its branches.
All assets, capital and liabilities of the building society were transferred to the bank.
At the time of the merger, it was the smallest of four building societies, operating from a single branch at the group's headquarters in New Kingston.
FirstCaribbean Building Society held assets of J$9.15 billion at the end of June and total capital of J$2.39 billion.
The bank held total assets of J$48.23 billion at the close of the June quarter. The top three banks by assets are National Commercial Bank, Scotiabank Jamaica, and RBC Royal Bank, respectively.
FirstCaribbean Jamaica's capital amounted to J$5.73 billion in June, reflecting a continued erosion of equity which amounted to J$6.77 billion in June 2011 and J$6.17 billion in June 2012, according to central bank industry data on the commercial banking sector.
ABOVE MINIMUM REQUIREMENTS
Holness said in the release that the bank's "total capital ratio of 15.8 per cent as at July 31, 2013 remains well in excess of minimum regulatory requirements, and the injection of the US$70M will further strengthen its capital and position the bank for future growth prospects".
Regarding the expansion programme, Holness told Wednesday Business that the bank has commissioned a team to ascertain areas of Jamaica that are underserved by existing banks.
He said one new branch is planned to come on stream next year but the location is subject to regulatory approval.