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80 JMMB shareholders say yes to restructuring - Company testing mobile banking market through Trinidad subsidiary

Published:Friday | September 19, 2014 | 12:00 AM

Avia Collinder, Business Reporter

Shareholders of Jamaica Money Market Brokers voted unanimously on Wednesday to approve the new scheme of arrangement to create a new holding company JMMB Group Limited that will become the parent for JMMB and its businesses.

Owners of JMMB will also swap their shares for the new JMMB Group shares.

Chairman Dr Noel Lyons said at the special meeting for the vote that reorganisation of the group was required both as a condition of approval for the acquisition of Capital and Credit Financial Group (CCFG), which included a merchant bank, and rules for financial conglomerates under the newly passed Banking Services Act 2014.

Though JMMB is a securities firm, its acquisition of a merchant bank places it within the regulatory ambit of the new banking law. Laying the groundwork for its future reorganisation, the company created JMMB Group as the vehicle back in May 2012 with Keith Duncan and Carolyn DaCosta each holding one of the two issued shares.

Two years later, JMMB is still finalising the merger of its CCFG businesses.

It is awaiting sign-off on the treatment of the group's liabilities by the Bank of Jamaica before the process can be completed, at which point it will liquidate CCFG. Captial and Credit held more than $3 billion in debt ahead of its sale.

JMMB is otherwise pressing ahead with its overseas expansion programme, with its newest venture being the exploration of the mobile banking market.

Its now wholly owned commercial banking subsidiary, InterCommercial Bank Limited (IBL) of Trinidad, is assessing what it would take.

"The mobile banking initiative is about giving IBL bank clients the ability to do banking transactions via mobile devices, alerts, account-balance status, transferring of funds," said IBL Chief Executive Officer Krishna Boodhai on Thursday.

"There is a significant capital investment that has already been undertaken over the last fiscal year. The exact value of the investment cannot be supplied at this time," the banker told the Financial Gleaner.

Recapitalised last year

IBL was recapitalised by JMMB late last year to the tune of US$25 million and is now poised to increase profits through different initiatives, including the offer of products and services available in the wider JMMB Group, Boodhai said.

Activity slowed within the bank last year when its regulatory capital was depleted in a push to grow its loan book. The bank was also affected by a large non-performing loan which has since been collected. Non- performing loans, Boodhai stated, have been reduced from 20 per cent three years ago to three per cent currently.

Last year's losses have been reversed with the bank reporting profit after tax of US$1 million for 2013-14. Its assets were US$278 million at yearend March, reflecting a 13 per cent improvement year-over-year.

IBL as a bank started in 1998. JMMB acquired 50 per cent in 2005, and bought the other 50 per cent in October 2013.

"It was a challenge to run it on a fifty-fifty basis," Boodhai said.

JMMB's new structure was approved by the Supreme Court on April 25, but the process needed shareholder approval to be concluded.

Under the new scheme, JMMB Group will become the ultimate parent of JMMB Limited and all its subsidiary businesses in Jamaica and overseas, spanning insurance brokerage, banking and investment assets in Jamaica, Trinidad and Tobago and the Dominican Republic.

The group chart lists 20 corporate entities

owned by JMMB Limited, including Banco Rio de Ahorro y Credita and Corporacion de Credito America (CCA), which, at last disclosure, it was finalising acquisition.

JMMB needed 75 per cent buy-in at Wednesday's extraordinary, but got 100 per cent endorsement from the 80 shareholders who turned up to vote on the reorganisation plan - representing 614.3 million of the 1.63 billion issued shares, an indication that some top shareholders did not participate. Some 78 per cent of the company's shares are owned by a group of 20 individuals and companies.

The new structure will take effect when a copy of the court order is delivered to the Registrar of Companies.

JMMB will delist from the three regional exchanges on which the stock trades - Jamaica, Barbados and Trinidad - and applications made for a new listing of JMMB Group Limited on the same exchanges. Shareholdings in JMMB will be swapped for equal shares in JMMB Group.

Dr Lyon, JMMB Group CEO Keith Duncan and company secretary Carolyn Dacosta, are now the holding company's sole directors. The other directors of JMMB will be added to the JMMB Group board, at which time DaCosta will resign as director and be reappointed company secretary.

avia.collinder@gleanerjm.com