Sep 2006 Financial News

RBTT Bank Jamaica seeking stockbroking, unit trust licences

Sep 20, 2006

RBTT Bank Jamaica has made overtures to at least three of the 11 owner/brokers of the Jamaica Stock Exchange (JSE) in an apparent bid to expand its reach in the investment community, Business Observer sources have said.

According to our source, who spoke on condition of anonymity, RBTT is seeking to acquire both a stockbroking and a unit trust license, and the licenses might not necessarily come from the purchase of just one entity.

The 11 brokers who are joint owners of the JSE are Barita Investments Limited, Capital & Credit Merchant Bank (CCMB), Dehring Bunting and Golding (DB&G), NCB Capital Markets, First Global Financial Services (FGFS), Jamaica Money Market Brokers (JMMB), MV/L Stockbrokers, Mayberry Investments Limited, Paul Chen Young & Company, Victoria Mutual Wealth Management and Pan Caribbean Financial Services (PCFS).

Last night, financial analysts told the Business Observer that should RBTT look to buy both licenses from one entity, it would only have four choices - CCMB, Barita, PCFS and DB&G.

According to the Business Observer source, RBTT has been aggressively pursuing the three candidates in a bid to provide immediate synergy. The aim, according to our source, is to "move RBTT's market share from a distant number three closer to the market share of the National Commercial Bank (NCB) and the Bank of Nova Scotia (BNS)".

Bank of Jamaica data show that for the period ending June 30, 2006, BNS had a capital base of $17.304 billion, while NCB's capital base is $14.546 billion. RBTT sits in third position with $7.801 billion.

RBTT's investment arm, RBTT Securities, has done reasonably well with a contribution of $200 million to the group's bottom line. The investment house is able to offer its clients stockbrokerage services through an alliance with Dehring Bunting and Golding.

RBTT's total net income for the three months ended June 30, 2006, was US$1.098 billion as compared to unaudited 2005 results of US$1.1246, a decline of four per cent. Profit after taxation for June 2006 was $3.493 billion as compared to the unaudited figures for the corresponding period of 2005 of $3.326 billion, a five per cent increase.

RBTT Trinidad & Tobago contributed US$532 million, whereas the other Caribbean territories contributed US$566 million. However, the group is clearly hungry for further growth.

Speaking earlier this year, RBTT Jamaica's managing director Rodney Prasad said, "What I see is deposits islandwide declining in relative terms. The average interest rate on deposits is between seven and eight per cent, so you would expect your deposit base to increase by that figure, plus whatever the inflation rate is. In real terms, the deposit base is declining throughout the sector. Why? I think the rate of savings in real terms is declining. Secondly, a lot of the savings are migrating to securities dealers in and out of Jamaica as well".

Explaining the strategy, Prasad said that commercial banks would be forced to follow that money wherever it was going and get involved in those activities. "This is why we are getting involved in securities trading to a greater extent," he said.

RBTT Jamaica was formed in 2001 from the government-created Union Bank of Jamaica Limited (UBJ) comprised of the failed Citizens Bank Limited, Eagle Commercial Bank Limited, Island Victoria Bank Limited and Workers Savings & Loan Bank.


Source:

The Jamaica Buisness Observer
Dennise Williams
Wednesday, September 20, 2006

http://www.jamaicaobserver.com/magazines/Business/html/20060919T220000-0500_113086_OBS_RBTT_SEEKING_STOCKBROKING__UNIT_TRUST_LICENCES.asp