Sep 2012 Financial News

JMMB to form holding company, restructure group operations

Sep 28, 2012

Jamaica Money Market Brokers Limited (JMMB) continues with the integration and consolidation of the Capital and Credit Financial Group (CCFG) with plans to form a new holding company under a broad restructuring of the overall operation.

The new entity will be called Jamaica Money Market Brokers Group.

The limited liability company will be delisted from the Jamaica Stock Exchange and replaced by a listing of the JMMB Group, whose operations now span securities dealing, merchant banking, remittance and commercial banking overseas.

"What we will do, basically, is a share swap from JMMB Limited on a one to one basis into a new entity called JMMB Group, so there will be no loss to shareholders in terms of the value," said chief financial officer Patrick Ellis.

"All it will be is a simple reorganisation of the group so the structure is better able to foster operational efficiency and ensure regulatory supervision," said Ellis at JMMB's annual general meeting on Wednesday.

Shareholders will be required to vote on the change with at least a 70 per cent majority needed to approve the plan.

The date of the vote is still to be determined.

"It is a process and shareholders will be required to vote on the process at a later date. Right now, we are just keeping you informed," said Ellis.

The CFO also pointed out that coming out of the acquisition of CCFG, JMMB currently holds two trading licences - its own and that of Capital and Credit Securities Limited - but plans to sell the CCSL licence as well as CCSL's shares in the JSE.

These transactions, he said, represents an opportunity for the group.

"JMMB is pursuing the sale of the trading license and is in advanced negotiations to conclude that transaction within the next quarter," Ellis said.

"We also now hold two seats with a 20 per cent share in the Jamaica Stock Exchange, but the rules only allows for a maximum holdings of 10 per cent to any one shareholder and, as such, we are now negotiating to sell those shares and to realise the value embedded," he said.

Once a deal for the trading licence is completed, all entities within the merged group will be rebranded under the JMMB name.

"So we would end up with a banking arm, a remittance arm, the securities arm, our operation in Trinidad which comprise a bank and securities arm and in the Dominican Republic where we are already operating a securities arm and a savings and loan bank, which we are awaiting approval on," the CFO said.

"So all of those in the new structure will allow for improved business line and diversification in terms of product offerings to customers, which can only lead to increase shareholder value in the long term."

Keith Duncan, group chief executive officer, said the rebranding would be spread over a period - the company expects the complete rebranding and restruc-turing to take three months to a year to finalise.

Capital and Credit Remittances Limited will become CCRL-JMMB Remittances in the transitional phase, but will eventually be renamed JMMB Remittances.

Capital and Credit Merchant Bank will also go through a transitional phase to become JMMB Merchant Bank.

At least 82 per cent of the assets and liabilities of CCSL have already been transferred to JMMB Fund Managers Limited. CCSL will eventually be wound up and its dealer licence sold.

Duncan said the strategic focus will be to leverage the group's strengths and opportunities from the acquisition to grow market share, enhance 'client intimacy', and improve operational efficiencies across the territories where the group operates.

As part of the process, JMMB will review and clean up the loan portfolio, look for synergies from integration and centralisation of functions, and improve processes at the merchant bank.

In June 2012, JMMB acquired 93 per cent of CCFG in a J$4-billion takeover. The acquisition resulted in growth of its asset base to J$154 billion and its capital base to J$14.42 billion.

But it also saddled JMMB with new debt.

The non-performing loan portfolio of the merchant bank is being rehabilitated where possible or put up for sale.

So far, Ellis said, of the non-performing loans acquired, the company has managed to recover two loans, and rehabilitate a similar number, while four have been sold into a special-purpose vehicle. Six more loans, he said, are now left to be rehabilitated.

At the formation of the JMMB-CCFG deal, the merchant bank had more than J$3 billion of non-performing debt. JMMB's current exposure was not disclosed.

Duncan is confident that the investment in CCFG will enhance the group's performance.

"With the complete merger of CCFG we should deliver great returns," said Duncan.

Already operating in the Dominican Republic and Trinidad, a part of JMMB's strategic plan includes further regional expansion across the Caribbean and Central America.


Source:
sabrina.gordon@gleanerjm.com
Sabrina Gordon, Business Reporter
Jamaica Gleaner
Friday September 28, 2012

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