Oct 2008 Financial News

JMMB sells stake in CMMB

Oct 15, 2008

Jamaica Money Market Brokers has sold its 45 per cent stake in its Trinidad affiliate Caribbean Money Market Brokers (CMMB) to majority partner CL Financial for US$41.37 million or J$3 billion.

JMMB has given up both its stake in CMMB and in its securities subsidiary in which it also had a 45 per cent interest. "This development has been on the way for quite some time," said Keith Duncan, group chief executive officer, explaining the reason for the sale. "We have been in discussion with the CLICO group for the last 15 to 18 months and we thought that this was an opportune time to sell," he said.

Commercial banking
The sales injects liquidity into the brokerage at a time when it is building out its regional business to launch into commercial banking at home. The announcement was made after market close on a day when the stock market traded up 885 points, its second day of advance following three weeks of heavy losses.

JMMB was among the stocks leading the market into positive territory, gaining 35 cents to close at $8.35 - good news for the company which last month disclosed a 3.0 per cent exposure of its own funds in a failed US bank, Lehman Brothers, sparking some nervousness among its clients.

The regulator, Financial Services Commission, has assured investors that JMMB and the securities industry are fundamentally sound. The brokerage at June 2008 commanded $113 billion in assets and over $6 billion in equity. The sale, said Duncan, "will boost our balance sheet big time." The CMMB transaction, which was finalised at the end of September, he adds, has yielded a substantial return on the investment of $112 million in the Trinidad brokerage some eight years ago.

JMMB will still have a presence in Trinidad. The brokerage is in the process of expanding commercial bank Intercommercial Bank Limited, which it manages, but whose ownership is split 50/50 between JMMB and Mittal Brothers.

IBL expansion
Duncan said the expansion as well as the build-out of JMMB Dominicana - its 2005 acquisition in Dominican Republic - will be supported by the CMMB sale proceeds. Resources will also be deploy across other business lines with a focus on our core product lines in the market, said Duncan. The company expects that if, as expected, the Jamaican central bank signs off on its plans for a commercial bank here, it would need to pump in at least $1 billion as start-up costs.


Source:
sabrina.gordon@gleanerjm.com
The Jamaica Gleaner
Wednesday October 15, 2008