JPS & Partners merges with bauxite credit unions
Published:Friday | August 30, 2013 | 12:00 AM
Avia Collinder, Business Reporter
JPS & Partners Co-operative Credit Union has expanded its services to workers in the bauxite sector through two mergers executed in one month.
The first of the two, Kirkvine Credit Union, was merged with JPS & Partners on July 31; the second transaction with Ewarton Credit Union will be finalised this weekend.
JPS & Partners is a 57-year-old company first formed to serve workers in the energy and technology sectors. Based on unaudited figures at July 31, the merged entity will value J$3.75 billion by assets, and total savings of J$2.89 billion.
Its membership base will grow to 9,755.
The credit union currently serves employees, ex-employees, pensioners and relatives of existing members of Jamaica Public Service Company, Jamaica Private Power Company Limited, Jamaica Energy Partners and Rural Electrification Programme (REP) in the energy sector; Digicel, in the technology sector.
The mergers add to the roll the employees of UC Rusal, which owns the Kirkvine and Ewarton bauxite mining works. And it gives Kingston-based JPS & Partners a presence in the parishes of Manchester and St Catherine, where the two bauxite entities are located.
Jamaica's bauxite sector is regaining some momentum after the global economic downturn during which mining capacity had been idled, the knock-on effect of which led to job cuts and a slowdown of economic activity in bauxite areas.
Ronald Thomas, former vice-president of Kirkvine Credit Union and current board member at JPS & Partners, says the merger will see revived financial activity and new life injected in community banking in his area.
"The Kirkvine Credit Union was an in-house credit union with membership limited to employees. With the closure of Kirkvine
Works, the financial activities went down because a lot of people were out of work," said Thomas.
"People out of work do not have an ability to borrow."
The plant closed in 2009, and workers were laid off in stages up to 2010. As the jobs died, the credit union began to struggle.
"We attempted a merger with Ewarton, which fell through. Now, with JPS we hope for a more stable and financially active credit union," Thomas said.
Derrick Tulloch, president of JPS & Partners, said Monday that the mergers would strengthen the viability, service and value of all three entities.
"With the impending Bank of Jamaica regulations, more credit unions are seeking to enter into merger partnerships. Mergers strengthen the capital base of credit unions which increases their liquidity, the more liquid an entity, the stronger their lending power," Tulloch said.
Kirkvine Credit Union was established in 1973, while Ewarton Works' opened in 1972, both serving employees of the bauxite industry and their relatives.
Tulloch said the second merger is on track this weekend, and that transfer letters from the registrar at the Department of Co-operatives and Friendly Societies are expected to be in hand by Monday, September 2.
The name of the merged entity will remain JPS & Partners Co-operative Credit Union.
"However, from a strategic standpoint, we will examine the issue of rebranding," Tulloch said.
The new entity is targeting growth over twelve months of 6.5 per cent in loans, five per cent in savings and a surplus of 10 per cent. Their combined profit last year amounted to J$43 million - JPS J$30.6m; Kirkvine J$6.7m and Ewarton J$6m.
The three credit unions each have non-performing loan portfolios ranging up to five per cent of their loan books, for which Tulloch says adequate provision has been made.
To facilitate its expanded membership, Tulloch says the company will be investing J$50-60 million in new technology in the 2013-2014 period.
"This is with a view to bring connectivity across our three locations as we expand our services to Kirkvine and Ewarton. As service is our standard, and being our member's financial partner for life is critical to us, the credit union will invest in cutting-edge technology systems that we believe will improve the efficiency of the organisation and will offer our members the flexibility and convenience to carry out their day-to-day business transactions, and also provide access to a number of current and future services," he said.
The group is also planning to expand services into mobile and online banking, but Tulloch disclosed no details.