May 2011 Financial News

Capital & Credit to sell Cayman operations

May 02, 2011

The-Cayman based operations in Capital and Credit Remittance Limited (CCRL) will be sold off to a buyer in that country.

Andrew Cocking, Capital and Credit Financial Group (CCFG) deputy president and CEO, said the decision to sell the Cayman business comes following a year in which the remittance business of CCRL saw negative growth but reduced costs. He said the sale was necessary to continue to keep the costs of operation in the remittance business to a minimum.

"Our sub-businesses in Cayman, we are taking steps with that business so that the costs associated with that business will not be ours anymore but for a third party. We will continue to get the flows there," he said.

"What we saw as prudent there, we are moving to have a Cayman entity own that entity instead of us so they would absorb all the operating costs. The entity we are talking to sees it as a positive synergy for themselves because they are also in the Payday loan business," Cocking said.

CCRL's 'Reggae Money Express' has five locations in Cayman. However, the company has over 18 locations across the Caribbean, including 'Union Caribe' in Aruba and Curacao, 'Omni' in the Bahamas, and over 60 'Reggae Money Express' locations in Jamaica. Cocking did not say whether the other Caribbean locations will also be sold off but confirmed that the group is in discussions with local entities for a 'strategic partnership'.

However, Cocking confirmed that CCRL controls under one per cent of market share for remittance business as major players such as Western Union and Moneygram have consolidated with smaller players to take a bigger share of the remittance flows.

"The big companies like Western Union and Moneygram have consolidated in a way that they have said to institutions that 'listen, you either represent me or you represent nobody else'," Cocking said.

But he noted that CCRL has found that this consolidation has created opportunities to serve those smaller businesses left out by the big two.

"We are the entity that has multiple payout partners. And what our focus is, is to make sure that we can continue to move on that opportunity," he said. "One of the interesting things that has happened in the market is that we are becoming the remitter for the smaller remittance companies. A lot of the third-party remitters are now coming to us to for small institutions and this is one of the reasons I think we are seeing an uptick in the numbers," Cocking noted.

Despite a reduction in remittance flows during the depths of the recession in 2007 and 2008, Cocking sees hope in the recovery of the remittance business as remittance flows to Jamaica increased from US$1.79 billion in 2009 to US$1.9 billion in 2010. He said CCRL has seen an uptick in their transactions as well.

"Despite the challenges in terms of the remittance flows, we have seen that the remittance income for Capital and Credit Remittance has actually improved. In 2009 we did 87,125 transactions, in 2010 that moved up to 102,000," Cocking said.

"What we also did in 2010 was tighten our operations and even though we made a loss, the loss was less than we made in 2009," he added. Despite the loss, Cocking sees the value of staying in the remittance business, even as the group is being primed for a buy-out.

"We believe that the rationale for staying in the business is that if we continue to see flows and our fixed costs continue to the business, profitability can be enhanced. If we are in a situation where we saw our costs going up and our flows not going up then it wouldn't make any sense, but that's not the case right now," he said.


Source:
Alicia Roache
Jamaica Observer
Sunday May 1, 2011

http://www.jamaicaobserver.com/business/Capital-n-Credit-to-sell-Cayman-operations_8725292#ixzz1LDNqwTNI