By Al Edwards, Business Co-ordinatorTHE FINANCIAL Services Division of Grace, Kennedy & Company Limited is now undergoing major reorganisation and is to merge its commercial and merchant banking arm.
This announcement was made by Don Wehby, chief financial officer and chief operating officer for its Financial Services Division.
In disclosing some of the elements of the reorganisation, Mr. Wehby pointed out that the Division's plans are subject to approval by the Bank of Jamaica and the Financial Services Commission.
A major plank in the reorganisation is the merger of First Global Bank Limited, the Division's commercial banking entity and George & Branday Limited, its merchant banking arm.
THE NEW ENTITY
The new entity will be known as First Global Bank Limited. Also being amalgamated as part of this exercise are the securities companies of First Global Bank Limited and George & Branday Limited, and the smaller entities such as First Global Stockbrokers Limited, the lease financing company, Global Capital Services Limited and Grace Pension Management Limited will now form part of this consolidation.
The proposed date of the merger will be March 31, 2004, and future plans call for listing on the Jamaica Stock Exchange in the third quarter of 2005.
Mr. Wehby cited a number of reasons for the decision to effect the merger including strengthening the capital base of the banks for future growth and competitiveness; pooling the experience and expertise of staffers in order to maximise efficiency and cost savings; enabling risk management to be more focused and improving customer service through an expanded range of services.
He pointed out that the Financial Services Division has been growing at a rate beyond projections and is now in a leading position in the Grace, Kennedy Group, having contributed 39.1 per cent of the Group's total pre-tax profits in the last financial year. For 2003, the Division showed significant increases in both revenues and profits at the end of the third quarter.
"This outstanding performance provides a realistic basis on which to project ongoing growth with a merged operation," Mr. Wehby said.
The merged entity will have J$25 billion in assets and over J$1 billion in shareholders' equity.
Commenting on the proposed plans, Grace, Kennedy's Chairman & CEO, Douglas Orane said "This move is in keeping with our vision to meet the unmet needs of Jamaicans and other Caribbean people wherever we live. This amalgamation will be vastly stronger than the individual elements of which it is comprised and will therefore be in a more robust position from which to compete with other financial entities in the Caribbean region."
CULTURE OF EXCELLENCE
Mr. Wehby said that plans for the merger and consolidation exercise in the Financial Services Division will enable the Division to build the First Global brand as a strong Caribbean brand offering to customers throughout the region, an established culture of excellence and a commitment to maintaining the highest possible standards of performance. Lead advisor for the merger exercise is PricewaterhouseCoopers supported by a legal team comprising DunnCox and Mark Golding of Hart Muirhead Fatta.
BANKING ENTITY
The central office for the merged entity will be at the ICWI building on St. Lucia Avenue. George & Branday's offices at 1 St. Lucia Crescent will house the securities company offices. The First Global commercial banking entity will continue to operate from its current offices in the LoJ building in New Kingston and on Gloucester Avenue in Montego Bay.
The staff of all companies involved have been advised of the programme and given the assurance that the exercise will be conducted in a manner that ensures that the interest of all stakeholders will be taken into account.
"It is too early to make any definitive assessment of our staffing requirements in the future. As we have always done in exercises of this nature at Grace, Kennedy, we will be mindful of the interests of all stakeholders and will deal with everyone on a fair, equitable and caring basis," Mr. Wehby concluded.
Speaking to Wednesday Business last night, Mr. Wehby said: "Recently the financial division has been the leading contributor to Grace's Group profits. This new entity will have a capital base of approximately $1.8 billion. We will now look to grow the Grace financial services brand in the English speaking Caribbean and to that end we have already taken a stake in a Barbadian merchant bank.
ESTABLISHING BRANCHES
"Closer to home, we will be establishing branches in strategic regions. The plan is not to have a broad based branch network but to open in Mandeville, two more in Kingston then set up operations in Ocho Rios," Mr. Wehby said.
"We are positioning ourselves to be a major player in the Jamaican banking sector and are pleased to offer investment services all under one roof with our stockbroking arm becoming a division of First Global Securities," Mr. Wehby said. "We already offer e-banking and will be looking to introduce Visa credit cards. We have applied to MultiLink to get our own ABM machines."
Mr. Wehby said both George & Branday and First Global's revenues and profits have grown by double digits."
