Robert Pitfield, chairman of BNS Jamaica, will also head the board at the new Scotia Group. Both companies will have the same board. - File

Ashford W. Meikle, Business Reporter

The newly constituted Scotia Group (SGJ), whose stock was listed on the Jamaica Stock Exchange Tuesday, lost $1.45 or 6.2 per cent of its value on its first day of trading when 22,630 non-block ordinary shares changed ownership.

Some 3.1 billion SGJ shares were listed at $23.55 - the price at which the BNS stock closed Monday - along with 100 million BNS preference shares at a price of $1.00 per share.

More than 2.92 billion BNS ordinary shares were also delisted.

At the end of the trading day, the SGJ stock closed at $22.10, having had bids as low as $22.00 during trading, while the BNSJ preference shares were firm at $1.

Scotia Group will have the same 15-member board as its commercial banking subsidiary Scotiabank Jamaica, which is chaired by Robert Pitfield.

Completion reconstruction Scheme

Yesterday's listings marked the official completion of Scotiabank's Scheme of Reconstruction, following its acquisition of majority share holding in the investment house, Dehring Bunting and Golding (DB&G), resulting in the creation of Scotia Group Jamaica Limited, the parent company of DB&G and the Bank of Nova Scotia (Jamaica) Limited.

Along with its local subsidiary, BNS Canada acquired 68.5 per cent of the over 310 million DB&G's shares last year.

The local bank had argued that the Scheme of Reconstruction was necessary, saying the BNSJ's contingent interest amounted to 15.80 per cent of the shares in DB&G, which meant that its minority shareholders would not fully participate in or benefit from the acquisition.

The bank argued that once the reconstruction was complete, the ownership of BNSJ and DB&G would be more full under the new corporate umbrella, Scotia Group Jamaica Limited

However, as part of the reconstruction, BNS Canada agreed to release its contingent interest in the 52.74 per cent of the DB&G shares acquired in exchange for additional Scotia Group shares by taking into consideration the $3.5 billion which BNS Canada spent to acquire the DB&G stake, as well as the average market price in the six months prior to the bid in October 2006 - some 184 million shares.

"You will recall when BNS closed on Monday the PE ratio was 10.02 times," said senior analyst at JMMB, Kiesa Ansine.

With the additional shares issued to BNS Canada, Ansine argues that the market corrected the price.

"With the dilution, you find that the EPS has been adjusted downwards, which would result in a larger PE ratio. So, in order to retain that 10.02 times, the price was adjusted to the indicative comfort level by investors prior to the dilution."

Over the past year, Scotiabank and DB&G have been among the top ten best-performing stocks on the JSE, gaining 23.55 and 23.49 per cent, respectively.

ashford.meikle@gleanerjm.com