Has the Bank of Jamaica and the Ministry of Finance rejected the application? And if so under what conditions.

It’s been almost eight (8) months since the announcement of Jamaica Money Market Brokers (JMMB) offer to acquire up to 100 per cent of the issued share capital of Capital & Credit Financial
Group (CCFG) at a price of J$4.55 per share, subject to regulatory approval by the Bank of Jamaica. According to latest information this approval has not yet been given.

The question many in financial circles are asking is why is this taking so long?

According to official reports the proverbial application was to go in by the end of September 2011 with BOJ taking 60 days to review the application before coming to a decision. This meant that JMMB should have been given the green or red light from the Bank of Jamaica sometime
by the end of November 2011.

Has the Bank of Jamaica and the Ministry of Finance rejected the application? And if so under what conditions.

The principal shareholders of Capital & Credit have already agreed in principle to the deal and were awaiting its Board of Directors approval, where most if not all the principal shareholders sit.

There is growing speculation that the failure to date to offload a significant portion of Capital & Credit Financial Group (CCFG) non-performing loans and debts which would significantly
improve the offer price of J$4.55 per share is to blame. The current state of the Jamaican economy is making this very challenging.

There is further speculation that outstanding debts secured by CCFG shares by a major shareholder is the real reason and pressure to sell the financial group. The major shareholder is rumored to be heavily in debt and is seeking to off load shares to cover the debts.

According to a recent newspaper article Curtis Martin, president & chief executive officer of CCMB the major banking arm of CCFG said “there was a significant reduction in CCMB’s loan loss provision, moving to a net recovery of just over $13 million as at December 2011, from the negative position of approximately$80 million in 2010.”

Notwithstanding the adverse impact that current economic conditions were having on loan
customers in the banking sector, Martin said, CCMB has been able to stabilize its level of past-due loans and expects significant recoveries as it continues its efforts to regularize those debts and expedite collections.

JMMB  offer is a combination of 70 per cent cash payment of J$2.95 billion and the remainder by way of an issue of new ordinary shares in JMMB to the shareholders of CCFG, subject to the necessary JMMB shareholder approvals being obtained.

Jamaica Money Market Brokers, which has to date failed to secure a commercial banking license from the BOJ, was seeking to acquire CCFG’s in an effort to get around this. According to one financial analyst spoken to “Now that the PNP was in office the likelihood of JMMB securing a commercial license was much greater, which would mean that the longer the CCFG deal takes to consummate the less attractive it becomes”. BM