Aug 2012 Financial News

JMMB doubles profits to Ja$2b

Aug 21, 2012

Jamaica Money Market Brokers (JMMB) closed its June first-quarter flush with cash and doubled its profit to Ja$2 billion on gains from its takeover of former rival Capital and Credit Financial Group (CCFG).

JMMB made a Ja$1.57-billion gain on the acquisition, resulting from the Ja$6.05-billion fair value of the CCFG net assets less the total purchase price of Ja$4.11 billion plus professional fees.

JMMB owned 93.14 per cent of CCFG at the end of June.

The acquisition will result in JMMB winding-up CCFG's securities arm, while keeping its merchant bank, pension, funds management and remittance services. These will eventually receive JMMB branding. But JMMB really wanted to gain CCFG's merchant bank licence as a leg-up to a commercial banking licence.

The group is now worth Ja$154 billion in assets, Ja$32 billion of which was contributed by CCFG, and had 50 per cent more cash, Ja$4.73 billion post acquisition.

The takeover offer included a cash payment of Ja$2.7 billion, or 70 per cent of the offer price, and a 30 per cent share swap.

JMMB's total equity at Ja$14.4 billion represents just over nine per cent of assets, but the securities firm said in its June earnings report that its capital to risk-weighted assets ratio stood at 19.7 per cent, well in excess of regulatory requirements.

The Financial Services Commission benchmark stipulates a minimum of 14 per cent.

The current size of Capital & Credit's bad debt portfolio was not disclosed nor the actual amount of the debt transferred. For its year ending December 2011, Capital & Credit had Ja$3.2 billion in non-performing loans plaguing the J$6.1-billion loan portfolio.

Last month, JMMB Group CEO Keith Duncan told the Financial Gleaner that two-thirds of the bad debts were transferred to a 'separate special-purpose vehicle' or a related shell company that would manage the sale of the assets underlying the bad loans over a two-year period.

As part of the acquisition deal, CCFG's legacy shareholders Ryland Campbell, Andrew Cocking and Gregory Shirley had committed to collect up to Ja$1.5 billion or half of the bad loans held by the merchant banking subsidiary; or otherwise lose up to 50 cents per share of the Ja$4.55 per share paid by JMMB for the group.

Their performance was due for review at midweek.

Meantime, Capital and Credit was officially delisted from the Jamaica Stock Exchange on Tuesday, August 14.

Clients of Capital & Credit Securities Ltd will be integrated fully into JMMB Investments in September; while JMMB will create a new and larger branch at Ocho Rios offering integrated merchant bank services and will re-enter the securities market in Trinidad & Tobago via an outfit called IBL Investments by March 2013.

JMMB already co-owns and operates a boutique commercial bank called Intercommercial Bank Ltd in Trinidad.

—Jamaica Gleaner


Source:
Trinidad Express
Tuesday August 21, 2012

http://www.trinidadexpress.com/business/JMMB_doubles_profits_to_Ja_2b-166843106.html