Sep 2006 Financial News

Capital & Credit seeks alliances outside of Jamaica

Sep 08, 2006

Since January, Capital & Credit Merchant Bank (CCMB) has been battling the rumour of its impending sale to competitor Pan Caribbean Financial Services (PCFS). However, Ryland Campbell, chairman of the Capital & Credit Financial Group (CCFG), majority shareholder of CCMB, says it simply isn't so.

Richard Byles, president and chief executive officer of Life of Jamaica, parent company of PCFS stated yesterday, "No, we are not looking to buy CCMB."

CCFG, Campbell says, will be making its alliances outside of Jamaica.

CCFG owns 70 per cent of CCMB which owns 100 per cent of Capital & Credit Securities. CCFG also owns 70 per cent of unit trust company, Capital & Credit Fund Managers (CCFM) and 100 per cent of the Capital & Credit Remittance Company along with 40 per cent of the Cayman remittance company, Express Remittance Limited.

Not seeking suitors
"We are not seeking any alliance inside of Jamaica. We are looking at an alliance outside of Jamaica." As to the question of whether alliance can be read as the fact that any part of the CCFG is up for sale, Campbell says, "I will not say we will never sell. I don't speak in absolute terms. If it is in the best interest of the shareholders, we would consider it."

The Chairman goes on to say, "I always tell my board, it is better to own 20-25 per cent of a large enterprise than to own 100 per cent of one that is small."

However, the for sale sign isn't hanging outside of CCFG's doors. Campbell says, "We are not actively engaged in finding a purchaser. However, if a viable entity comes along that meets our objectives and satisfies our regulators, we would consider it."

New US Dollar Mutual Fund
What CCFG is actively engaged in is the broadening of its product base and reach. Says Campbell: "In the first quarter of 2007, we will be in a position to offer a US-dollar mutual fund."

Currently, seven other financial services entities offer US dollar mutual funds - NCB Capital Markets, RBTT Securities, Mayberry Investments Limited, First Global Financial Services, Scotia Jamaica Investments, Sterling Asset Management and Dehring Bunting & Golding.

Four of the seven, sell the same Canadian-based CI Mutual Funds. CCFG will not be joining that assembly. Campbell explains, "We are looking for a niche product instead of a suite of funds. We won't be offering 20 different funds and say come and buy."

Interestingly, the new US-dollar product will not be offered through CCFM. According to the Chairman, "We had wanted to offer through our Unit Trust company two US dollar funds that would be fixed income and a fixed income fund with 20 per cent US equities. However, the Financial Services Commission (FSC) said that due to impediments in our local legislation, no foreign currency funds can be offered by local unit trusts at this time."

And so, the group went back to the drawing board and will present to the market a new fund offered through an overseas based entity. "It seems that mutual funds from foreign companies can register easier in Jamaica than a local fund."

Expanding unit trust market
Ironically, while CCFG has had to source a product from oversees to offer US-dollar funds to clients, the FSC will be lifting the nine-year moratorium on new Jamaican unit trust licenses.

In 2004, when the CCFG bought the Jamaica Unit Trust, it was the 'last' of four existing unit trust licenses available.
However, Campbell looks at the changing unit trust landscape in this way, "There will be more of the same and so people will have to choose based on service and management expertise. I am not in any way finding it objectionable; the market is just expanding."

CCFG gone abroad
And speaking of expanding, the Chairman revealed that his group will be making a major announcement before year-end concerning, "major expansion into both Trinidad & Tobago and Florida."

The listed CCMB, is restrained by regulations in terms of how it can expand and use its capital, Campbell says, but stakeholders in CCMB will feel the trickle-down effect of the manoeuvre. Out of the alliance, we will bring new products to Jamaica, especially out of Florida."

CCMB, ended yesterday's trading at $11.47. Year to date, CCMB has lost 48 per cent from its high of $22 in mid September 2005.

Dennise Williams
The Jamaica Observer
Friday, September 08, 2006
http://www.jamaicaobserver.com/magazines/Business/html/20060907T220000-0500_112621_OBS_CAPITAL___CREDIT_SEEKS_ALLIANCES_OUTSIDE_OF_JAMAICA.asp