Apr 2009 Financial News

RBTT Jamaica to enter residential mortgage market - RBC merger to make headway June, finalise 2010

Apr 24, 2009

RBTT Jamaica, the nation's third-largest bank by assets, is set to enter the residential mortgage market by the end of the calendar year, a service already being offered by sister operations in the wider Caribbean.

But the Minna Israel-led bank enters a market that is dominated by Jamaica National Building Society and Victoria Mutual Building Society, both of whose history reaches back more than a century.

And Israel will also face rivalry from institutions within her own sector, commercial banks Scotiabank Jamaica and FirstCaribbean International Bank Jamaica Limited, which together command a mortgage loan portfolio of more than $14 billion.

New product development

"We will be looking to grow the Jamaican operations. Already we have the right head in place and executive team, now we want to maximise efficiency as we integrate RBC (Royal Bank of Canada) and RBTT business lines," said Suresh Sookoo, chief executive officer of the RBTT financial group, and Israel's boss.

"New product development is also in the plan ... with RBTT Jamaica soon to offer residential mortgages."

Sookoo, who spoke to the Financial Gleaner on a short visit to Jamaica this week, said the Jamaican mortgage operation was to be launched in the latter part of 2009, but gave no more details.

RBTT Trinidad already offers residential mortgages.

In fact, Israel's office redirected queries to Sookoo, saying the product for Jamaica was being developed out of RBTT's headquarters in Trinidad.

RBTT Jamaica, whose asset base was $60 billion at December 2008, has already got its feet wet in commercial real estate, but that segment is a fraction of the overall commercial loan market valued at $1.86 billion.

On the residential side, where RBTT will test the waters, JN commands 44.78 per cent of the mortgage market with a loan portfolio of $32.6 billion.

Total residential loans were valued at $72.79 billion.

VMBS has a $28-billion portfolio, FirstCaribbean Jamaica commands $7.5 billion of the market while Scotiabank lags with $6.8 billion.

Grabbing market share

Annette Atkinson, spokeswoman for RBTT Jamaica, says it will be looking to leverage business from customers already on its books, but she also said the plan includes grabbing market share from existing players.

"The product will be presented as an excellent product to complete customers' suite of products and services that they currently accesses from the institution," she said.

The bank will be looking for business among mid- to upper-income earners, Atkinson said, and will be utilising its 20-branch network as sales points.

The banking arm of RBTT Financial Group, which was acquired last year by Royal Bank of Canada, is positioning itself to become the top bank within the Caribbean.

Those plans will awaken when RBC completes the merger of its existing Caribbean operations with RBTT's.

Sookoo suggests the process is likely to be substantially advanced within two months.

At the end of its financial year last year, RBTT Group earned pre-tax income of US$207 million, an improvement of 11 per cent over the previous year, a growth which, according to the bank, was underpinned by strong performance in the retail banking entities.

Efficient business model


Left: Suresh Sookoo, CEO of RBTT Financial group. Right: Minna Israel, managing director of RBTT Jamaica. - File photos

"We are working on putting in the most efficient business model with the new model from RBC," said Sookoo.

While the integration process is still to be completed, Sookoo said they are working towards a timeline set for the end of June.

"The integration of RBTT into RBC is well along the path to a June completion date," said Sookoo.

But the full rebranding that will create RBC Caribbean is likely to extend well into 2010.

"We are now seeking approval from the central banks to make the branches into subsidiaries of RBC," he said.

The branches are expected to be rebranded 'Royal Bank'.


Source:
Sabrina Gordon, Business Reporter
sabrina.gordon@gleanerjm.com
Jamaica Gleaner
Friday April 24, 2009

http://www.jamaica-gleaner.com/gleaner/20090424/business/business4.html