GRACE, Kennedy and Company Ltd. officially announced yesterday the merger of two of its subsidiaries in its financial services division commercial bank First Global Bank Ltd. (FGB) and merchant bank George and Brandy (G&B) into a new entity called First Global Bank Ltd. (FGBL).
The new entity will subsequently list on the Jamaica Stock Exchange in 2005 and launch new mutual funds in the near future. The combined firm will have a capital base of over $1.3 billion and control assets of over $23 billion.
Don Wehby, chief financial officer of Grace, Kennedy & Co. Ltd. and chief operating officer of the financial services division, explained to the Financial Gleaner that this move comes in light of the increased capital requirements of financial entities demanded by industry regulators.
Heading this new entity will be Wayne Wray, who was the managing director of George and Brandy Ltd. for the last seven years. And for the consumer, the watchword for this new entity will be convenience and efficiency. Mr. Wehby explained that FGBL would be opening mini-branches in Grace's HiLo supermarket chain. "We will be following the U.S. trend to have in-store banking. The branches will not be full service but customers will be able to complete basic transactions such as opening accounts and making deposits and withdrawals. We will have about two tellers and open for longer hours."
Mr. Wehby also hinted at the possibility of mini-branches at Grace's Rapid Sheffield hardware stores. Additionally, clients of FGBL will benefit from, "the pooling of the best talent from within banking and investment division, which should result in increased efficiency and cost savings." And it is not just clients that will benefit. Shareholders should be pleased to know that with the merging of the two entities, according to Mr. Wehby, "we will realise a savings to the bottom line of between $50 to $60 million without even looking at increased revenue." But, of course, increased revenue cannot be overlooked and so Grace has brought on veteran banker Sandra Shirley to head the securities division of the First Global brand. As required by law, banking and security dealers must be separate entities, and so also on April 1 George and Brandy Securities Limited has been renamed First Global Financial Services (FGFS). Ms. Shirley will serve as president of FGFS. Under the leadership of Ms. Shirley, FGFS will be launching five new mutual funds:
First Global Money Market Fund
First Global US$ Fixed Income Fund
First Global J$ Fixed Income Fund
First Global J$ Balanced Fund
First Global Jamaican Equity Fund
Grace has high hopes for this merger, which is founded in the performance of their financial services division. According to Grace, in 2003 this division accounted for 44 per cent of Grace, Kennedy's pre-tax profits. Also in 2003, FGB and G&B was the combined largest foreign currency trader in Jamaica, trading US$794 million. Looking at the securities trading aspect of Grace, the newly named FGFS will see the subsequent merger of the stock broking, property management, and pension management entities, which will become effective in June 2004. Taking a peek at the stockbroking and pension fund management activities of Grace reveals that First Global stockbrokers (which will be under the purview of Ms. Shirley) conducted $2.3 billion in trades during 2003.
Since 2001, the stock broking firm has attracted 1,886 customers. Grace Pension Fund Management Ltd. currently manages 15 pension funds with assets of $10.7 billion. First Global Bank will be adding a second drive-thru teller at 28-48 Barbados Avenue in New Kingston and will be investigating opening additional branches in Mandeville and Ocho Rios.
