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.