Jul 2012 Financial News
JMMB completes CCFG merger
Jul 27, 2012
Brokerage house Jamaica Money Market Brokers (JMMB) has completed its acquisition of Capital and Credit Financial Group (CCFG).
With the deal, JMMB will be able to delve into the restricted unit trust market with CCFG's products: real estate, equity and fixed income trusts.
Only three other financial institutions have unit trust funds, PanCaribbean Financial Services Limited, Scotia Asset Management (Jamaica) Limited and Barita Unit Trust.
With the merger, JMMB becomes the only company with a real estate trust fund.
"CCFG's unit trusts will play a significant part in increasing JMMB's product offering," said Keith Duncan, the company's chief executive.
The company received final approval for the takeover from the Minister of Finance and Planning after 93 per cent of CCFG's shareholders in Jamaica and Trinidad & Tobago accepted its offer.
JMMB's loan portfolio is being transferred to CCFG's merchant bank to strengthen its credit management and oversight, said Patrick Ellis, who becomes the combined group's chief financial officer.
CCFG had over $6 billion in non-performing loans between December last year and the end of March this year.
Those loans will be moved "to a special purpose entity for recovery," said Ellis.
As part of its credit management strategy, the non-performing loan portfolio will be split into debts that can be rehabilitated and those that will require a recovery plan.
JMMB applied for, but was refused, a commercial bank licence in 2008, but it still has ambitions in that direction.
"We will focus on the merchant bank, making the best of the acquisition and maximize our opportunities," said Imami Duncan-Price, the group marketing manager. "Commercial bank licensing will come later."
"This transaction means bringing the best of both CCFG and JMMB Group to the market," Duncan said.
JMMB plans to write to CCFG clients by the end of next month inviting them to become part of JMMB.
A dozen integration teams have been set up, with members from both companies, to organise the smooth merger of different departments, to be completed within a year.
"It's about getting the best of both groups, creating a synergy that will add greater value to JMMB," said Duncan-Price.
As part of the deal, JMMB's existing clients will get banking services and a debit card with which they can go shopping. JMMB's current card only gives its clients access to cash.
They will be offered credit cards in the next two months. The company's clients will also be able to use CCFG's remittance service.
CCFG's 9,000 to 14,000 clients, who currently have access to three branches, will be able to conduct business at JMMB's nine branches when they join its 190,000 customers.
Seventy-four CCFG employees were made redundant in July but JMMB has rehired 12 of them. Those workers who retain their jobs are expected to get pay increases. They will also be able to buy shares in the merged group at market rates.
"This expansion means the value of the entity increases and team members will now develop," said Duncan.
Over a month ago, JJMB posted the highest annual profits in its 20-year history. The group's net profits almost doubled to $2.2 billion for the year ending March 31.
With operations in Trinidad and Tobago and the Dominican Republic, JMMB does not restrict the number of products and services it offers to its clients. "We don't limit ourselves and don't pass on limitations to our clients", Duncan said.
By Shamille Scott Business reporter
Friday July 27, 2012