The Bank of Jamaica (BOJ) has given Cornerstone United Holdings Jamaica Ltd the green-light to proceed with a proposed reorganisation of its financial group.
The BOJ issued the no-objection on March 10 signed by Governor Richard Byles stating that its supervisory committee had no objection to the reorganisation of the group.
The BOJ’s go-ahead is a requisite for the regulator to issue a Financial Holding Company (“FHC”) license to the group.
Given that the Cornerstone Group owns both Cornerstone Trust & Merchant Bank, which is a deposit-taking institution, together with Barita Investments Ltd, and Barita Unit Trusts Management Company Ltd, which are additional regulated entities, the Banking Services Act requires the reorganisation of the group to consolidate the ownership of all regulated entities under a financial holding company.
Currently, Cornerstone Financial Holdings Ltd (Barbados) owns 75 per cent of Barita while Cornerstone United Holdings Jamaica Ltd owns 100 per cent of CTMB.
Post restructuring of the Cornerstone Group via a court-sanctioned arrangement, both Barita and CTMB will be owned 100 per cent by a financial holding company, to be named Cornerstone Financial Group Ltd.
The shareholders and shareholdings of CUHJ currently mirror each other and therefore, post reorganisation, these shareholders will have the same consolidated percentage shareholding in the FHC to be established as fully contemplated in the articles of incorporation of both Cornerstone entities pre-dating the acquisition of Barita.
According to Mark Myers, chairman of CUHJ and Barita, “the board has deliberately established best practices as it relates to governance including independence of our audit, compliance, and risk management functions. I am truly happy to be working with this esteemed team.”
Paul Simpson, founder, president and CEO of the Cornerstone Group, explained: “The vision for our group was always to provide frictionless integrated banking, investment banking, infrastructure and real estate investments in building Jamaica first, and the wider Caribbean at large.
“Even before final implementation of the BSA, it was clear to me and the initial shareholders of our group all the way back in October 2013, that in order to fulfil our business objectives, it would be critical for our group to be well-positioned through our corporate structure to fairly seamlessly enable, at a future date, the consolidation of the ownership of our bank and all other regulated entities under one financial holding company.
“The other initial shareholders and I, who would have commenced this journey some ten years ago, are extremely proud to acknowledge the fact that we are one step closer to having significant impact in Jamaica, the wider Caribbean, and the Americas.
“As a key enabler to effecting the future consolidation of our group in accordance with the law, the initial shareholders of our group ensured that the requirement for the shareholdings and shareholders of CFHL and CUHJ to be mirrored at all times, was enshrined in the articles of incorporation of CUHJ. This has always been a key ethos to ensure that no shareholder who initially placed their faith and confidence in 2013, is left behind.”
Post the reorganisation of the Cornerstone Group, it is expected that shares of the new FHC, Cornerstone Financial Group, will be offered over the JSE in exchange for shares in Barita.
“The listing of the FHC will create and unlock tremendous value for initial and recent Cornerstone shareholders while offering shareholders of Barita and the public significant value via the opportunity to own the banking operations of the Cornerstone Group as well which is expected to grow market share over the next few years exponentially through a digital focused strategy supported by reduced transaction-related fees, and seamless and frictionless digital service delivery.
“The reorganisation is also expected to drive greater efficiencies within the new group in realising certain technical and operational internal economies of scale which we expect to complement our existing key value drivers,” said Jason Chambers, chief investment officer of the group.