By Andrew Green, Staff ReporterWhen Michael Lee-Chin's AIC (Barbados) Limited took control of National Commercial Bank (NCB) in 2002, the Jamaican-Canadian billionaire reserved a special place for one of its little subsidiaries then known as Edward Gayle & Company.
He made his fortune in the capital markets of his adopted homeland and the stockbroking acquisition was seen as the key to a major push into the Jamaica capital markets. Within months NCB had secured full ownership and there followed a flurry of changes at the top.
Chris Williams, its deputy general manager says the board of directors had staked out a clear strategy for its development from last year. They renamed the stock broking company NCB Capital Markets and mandated a major restructuring operation.
"The board made a decision to reposition the company," Mr. Williams said. "The first step was to put a name on the door that people would more quickly recognise."
The name Edward Gayle is well known in stock market circles as the company's founders had been one the original members of the Jamaica Stock Exchange. But a name was needed that would immediately have resonance nationally.
"We won some and we lost some advantages, but we think we are ahead," he said.
ADVANTAGES
It was decided that the company should capitalise on the advantages it had as part of the NCB Group and the major benefit is the distribution channel that affords, he said. "Most of the clients are NCB clients, but previously they used the services of other brokers," he said. "We are now saying we are serious and they are bringing back their money."
NCB has more than 50 branches, and is one of Jamaica's biggest banks.
"We feel we have a significant competitive advantage," he said. "We have a technological infrastructure that is spread across the group in our key software."
While customers to access their accounts at the branches, they can access the services of NCB Capital Markets, he said. The technology behind this also allows customers to invest online at their convenience. The company itself was transformed internally.
MARKET PLAYER
Edward Gayle, though known as a stockbroker, had in fact become a significant capital markets player. In 2000, it opened agencies in Montego Bay and Mandeville and in financial year 2001, it turned a profit of $76 million and posted net free capital of $246 million. It was acknowledged as the country's top stockbroker for 2001 and had funds under management of approximately $10.2 billion at March 2002.
Mr. Williams said a technological transformation has subsequently changed it from the position where 60 per cent of the staff handled back office work, to one where only 30 per cent was carrying out such tasks and 70 per cent were dealing with customers. A careful audit of the company's operations showed that it could substantially simplify its work-flow and cut the level of bureaucracy. The process was painful as some staff were terminated and some redeployed to front office operations, he said. From about 85 in January, the staff count went to a low of around 70 before recovering to the present level of 88.
"At the end of the day," he said, "we are better for it."
It started the year with about $34 billion in funds under management, he said. "We are now close to $44 billion. That is a growth of 10 billion in 6 months. We are looking at growth of 60-70 per cent for the year."
The objective is to double funds under management in two years.
The prospects for achieving that objective should be substantially boosted when the company rolls out its Caribbean mutual funds.
"We bid for the Jamaica Unit Trust and were unsuccessful," he said. That acquisition was a part of our strategic plan, so we have moved on to plan B."
Subject to regulatory approval, the company will "shortly" be launching a set of mutual funds. "It will be based out of Jamaica and will involve investing in assets across the Caribbean."
A great deal of expertise was utilised the parent company, AIC. He said, "they have helped us in designing what we consider to be a very attractive fund in terms of structure and pricing."
Some of the assets to be placed in the funds have already been acquired, he said. "Trinidad, Barbados, Jamaica are the main areas where we are going to focus."
Competitors of NCB Capital Markets interviewed by Wednesday Business said they believed the company will achieve success, given the might of the NCB network behind them. But they cautioned that acquiring good ideas, good technology, good staff and a powerful parent would not be sufficient to provide the quality of service demanded by clients in this sophisticated market.
They said all of the company's advantages had to be harmonised to satisfy the customers, and achieving that would take a great deal of time and effort.
Mr. Williams said that despite the growth that had been taking place at the company, "Our spreads have actually improved because we redesigned our products."
Since the start of the year, "We have established wealth management, creation, and protection specialists," he said. These are come of the best people in the business and are based in the main NCB branches.
"We now have the most efficient distribution channel in the industry," he said. "When you go into any of the key branches of NCB you can now speak directly to one of our investment officers. They can assist you in designing a financial plan to help you to create wealth."
