Keith Collister, Contributor
TAFFE
JOE TAFFE has been designated as the next head of the Financial Services Division of Jamaica's leading conglomerate GraceKennedy. Generating over half of the group's profits, this division is actually GraceKennedy's most important division from the standpoint of profitability. He is now halfway through his four-month transition period before he succeeds Don Wehby as the chief operating officer.
Under Don Wehby's leadership, the Financial Services Division has been the fastest growing division of Grace Kennedy over the past five financial years (1999 -2004), growing to approximately half of the GraceKennedy's Group total profits, and has been a key driver of Grace Kennedy's spectacular earnings growth over that period. Joe Taffe's challenge will be to maintain this growth rate in an increasingly competitive financial services market.
The nine-month results of the financial services division bear testament to this increasingly competitive environment, as pre-tax profits declined by J$9 million for the quarter. Revenues nevertheless increased by approximately J$400 million due in part to the increased premiums in JIIC consequent on the acquisition of the Dyoll portfolio.
According to Mr. Taffe, First Global Bank, Jamaica International Insurance Company and Allied Insurance Brokers were the main contributors to the year over year increase in profits for the division. This increase was tempered by one-off expenses in setting up new businesses and branches, including its new health insurance joint venture MedeCus and the First Global Bank branch in Manor Park.
WHO IS JOE TAFFE?
Joe Taffe was educated at St. Jago High School and holds an undergraduate degree in management from the University of the West Indies. He started his career at PriceWaterhouse (PW), spent several years in the start-up phase of Highgate Foods, before spending a further eight years at PW. From there he joined GraceKennedy in 1989 as Group internal audit manager, subsequently joining the group finance division in 1998 (with a one year stint at Dairy Industries in 1990 -1991 as chief financial officer). Joe Taffe describes himself as a hard working, focused, success driven, results-orientated manager, who is easy going once people do what he expects of them.
DAIRY INDUSTRIES
His one year stint in 1990 -1991 at the Dairy Industries 'turnaround' was a key learning experience, he said, allowing him to develop extensive hands-on experience in the key business principles of accounting, risk management and control. As a turnaround, the well known phrase 'cash is king' acquired real meaning for Joe.
He said many businesses in Jamaica only pay lip service to the concept rather than really recognising and focusing on the critical importance of working capital management. Dairy Industries was heavily overstocked, while the costs of its cold storage division were horrendous. As a result of his experience, Joe believes a critical question in Jamaican business is as simple as whether you can really afford to run an overdraft or not, and particularly what is the cost of that overdraft, which many have clearly got wrong.
GEORGE & BRANDAY
Mr. Taffe's business skills were further honed in his involvement in the 1995-1996 turnaround of George & Branday. At that time, George & Branday's investment mix was split almost evenly between loans and investments, and the company was struggling principally due to its large bad loan portfolio.
Numbered among his key achievements in his time there, Mr. Taffe helped to reduce the large bad debt portfolio, and streamlined their then very manual operation thereby reducing their costs of administration.
TRAFALGAR COMMERCIAL BANK
Trafalgar Commercial Bank (TCB) was originally jointly owned, 51 per cent by Trafalgar Development Bank and 49 per cent by Grace Kennedy. According to Mr. Taffe, as a consequence of this split ownership it did not appear to be receiving the focus it would have received with one owner. When the deal for GraceKennedy to purchase the other half was approved in March 2001, TCB had slightly over $1 billion in assets, along with a large bad loan portfolio. After its take-over, in which Mr. Taffe was heavily involved from the inception, the bank was renamed First Global Bank.
The loan portfolio was cleaned up through an improved collection effort, and a strong credit committee was put in place which has since put good loans on the books. At the same time, the treasury and foreign exchange trading functions began to be developed, with the result that the bank now has three main profit drivers in loans, treasury/investments and foreign exchange trading.
FIRST GLOBAL FINANCIAL SERVICES
Mr. Taffe was also a key player in the regulatory-driven merger that led to GraceKennedy giving up its merchant banking licence for George & Branday, thereby merging its businesses into First Global Bank and First Global Financial Services respectively.
According to Mr. Taffe, the process of moving the banking business of George & Branday, such as its deposits and matching assets (including its few remaining loans) was relatively simple as it didn't require moving staff or changing departments.
Much more challenging was the merger of the diverse securities businesses that created First Global Financial Services in April 2004, as this involved bringing under one roof the personnel for such diverse businesses as securities, property, pensions, stockbroking, and mutual funds, the majority of whom had been run as different companies or business units with their own corporate cultures even though they were all part of the same group. Over one year later, he believes a single culture is now emerging, whilst much of the operations have been consolidated in the Central Services Unit located at the former George & Branday location. This essentially separate business unit, of which Mr. Taffe as Senior Vice President formerly had direct responsibility, provides common services for such critical areas as operations, finance, human resources, and risk management. In Mr. Taffe's view, one of the key changes coming out of this consolidation is the standardised reporting of the different operations under central services, which was not previously the case.
Vision
Mr. Taffe believes Grace Kennedy's Financial Services Division can be the best financial services centre in Jamaica and the Caribbean, with a complete "full service" range of products. In his view, there is no company in Jamaica with a greater product range than First Global Financial Services, although he acknowledges that with their recent investment in Blue Cross, NCB appears to be keeping pace.
He also sees opportunities for expansion particularly in Barbados and the Eastern Caribbean, where GraceKennedy already has footholds through its Signia joint venture in Barbados, and its joint venture with St. Lucia National Bank.
Growth, whether organic or by acquisition continues to be the priority goal for the division, and he advises that just because his division contributes half of group profits is no cause for complacency. Despite the consolidation of the sector, competition appears to be intensifying from stronger and better capitalised players.
He nevertheless believes his division can still thrive in this very competitive environment through a focus on service and new product development driven by paying attention to customer feedback.
Reflecting the views of the Grace Kennedy group, Mr. Taffe's main concern about the future is that the current crime situation is contributing heavily to the underperformance of the economy. What looked achievable six months ago in terms of operating performance is no longer achievable due to the poor economic and social environment. As a nation, he believes that we can't progress or even survive if we don't get the crime "monster " under control. In his view, it is sad to think how much more we could achieve as a nation if we dealt with this issue.
