JMMB cites fall in investor confidence
The investigations into fraud at Stocks & Securities Limited, SSL, will negatively affect investor confidence but not shake the wider system, JMMB Group CEO Keith Duncan said at the financial conglomerate’s quarterly investor briefing.
“The SSL situation is not systemic. But it is an individual entity that has had its challenges. The broader financial sector continues to be well-capitalised, and that is borne out in reports from the IMF and other multilaterals and agencies,” said Duncan, who added that a lot of confidence would have been eroded with all the “noise” it has created.
Duncan added that despite the issue affecting one small entity, it went global based on the client affected, international sport celebrity Usain Bolt. Most of the $3 billion alleged to have leaked from SSL accounts reportedly belonged to Bolt.
“Usain Bolt and Bob Marley are names known globally. So once Bolt is impacted the entire global markets would be aware of this, and it will leave a scar. We have to send the message that the Jamaican financial sector is resilient, strong, and that this was a one-off event with a specific entity and we continue to evolve our regulatory oversight.”
In the wake of the alleged fraud that first came to light on January 10, now under investigation, the Jamaican Government decided to expand the Bank of Jamaica’s regulatory remit to include non-banking financial institutions, while the Financial Services Commission’s role will devolve to consumer protection.
The transition to the new ‘twin peaks’ model will take up to two years to complete.
“The twin peaks will be efficient and ensure the achievement of two pillars. First, the financial services and prudential model; and second, market protection and consumer protection. We believe that this model which has been implemented globally, will bring a level of efficiency and market protection,” said Duncan. “Consumers have been asking for that level of oversight from a consumer protection perspective.”
Duncan’s concern regarding investor confidence comes amid a decline in quarterly earnings at JMMB Group.
The financial conglomerate, whose businesses span banking, investments and insurance brokering, reported a two-thirds drop in profit from $3.3 billion to $1.1 billion in the October-December 2022 period.
Over nine months, April to December, profit was down by half, from $8.8 billion to $4.76 billion.
JMMB Group holds assets of $640 billion, while its capital was estimated at $49.5 billion in December.
“All subsidiaries are well-capitalised,” said Group Chief Risk Officer Dereck Rajack at Wednesday’s investor briefing. “We continue to monitor this very actively,” he said.