Barita Investments is to be reorganised as part of a new financial holding company (FHC) to satisfy Bank of Jamaica regulations. The company said it expects this reorganisation will be completed by the end of its next financial year – that is by or before September 30, 2022.
Mark Myers, chairman of Barita Investments, outlined, in his statement attached to the company’s recently filed financials, that the reorganisation is necessary under the Banking Services Act. That is due to the fact that Barita Investments and Cornerstone Trust and Merchant Bank – a deposit-taking institution licensed by the Bank of Jamaica – have common shareholders. Cornerstone Financial Holdings owns just over 74 per cent of Barita Investments.
Cornerstone Financial Holdings also owns Cornerstone United Holdings Jamaica, which itself owns 100 per cent of Cornerstone Trust and Merchant Bank.
Myers in his statement said, “given that [Cornerstone United Holdings Jamaica] and [Cornerstone Financial Holdings] are affiliate companies by virtue of their common ownership, they will be seeking to organise their affairs under an FHC in accordance with the Banking Services Act.”
Under the Banking Services Act, financial entities with banking and non-banking subsidiaries must restructure themselves into a financial holding company for supervision by the Bank of Jamaica. That is the reason behind entities such as NCB Jamaica reorganising itself a few years ago into the NCB Financial Group, before de-listing NCB Jamaica shares and re-listing NCB Financial Group shares on the Jamaica Stock Exchange.
Myers in the statement said when the Cornerstone Group reorganisation is complete, Barita and its subsidiary, Barita Unit Trusts Management Company Limited, will be formally constituted under a licensed FHC along with Cornerstone Trust and Merchant Bank.
The company said given the impact the reorganisation is expected to have on its operation, it will use the opportunity to improve its structure and to generally streamline its operation. It indicated ‘that’ improvement of its structure will include strengthening its talent, risk management frameworks and deepening its relationships throughout the region. Efforts to get greater clarification on the statements about the reorganisation failed. A promised return call from its chairman did not materialise and an attempt to reach him after failed. Meanwhile, calls to Barita Investments Deputy Chairman Paul Simpson went to voicemail.
The notice of the reorganisation was given as the company reported a strong 2020/21 financial year which closed on September 30. At the end of the period, in unaudited financials, Barita Investments reported profits rose 49 per cent to $4.1 billion. At the end of September last year, the profit amounted to $2.8 billion. That from net operating revenue which reached $8.1 billion up from $5.1 billion.
Barita during the period saw strong performances in its interest and non-interest income. The company highlighted that its net interest income rose 74 per cent to $1.5 billion while its non-interest income jumped 55 per cent to $6.6 billion as it saw improvements in fees and commission income, foreign exchange trading and translation gains and gains on investment activities.
The company, which in September raised $10.8 billion in its additional public offering – its fourth successful raise in three years – said significant asset price inflation since 2020 means it will continue to deploy capital with extrem care and diligence given the significant uncertainty that persists in the operating environment.