The Jamaica National Group is planning to turn its building society JN Cayman into a commercial bank by establishing JN Bank in the Cayman Islands.
Speaking at the group’s annual general meeting on 19 Feb, CEO Earl Jarrett said JN had notified the regulator of its intention to change the business model.
Currently JN Cayman is offering mainly mortgages and savings to its members.
Jarrett said the main reason for the conversion is the regulatory constraints of Cayman’s Building Societies Act, which had impeded growth and profitability for years.
“For several years, JN Cayman’s growth has been stymied by Section 19 of the Building Societies Law, which stipulates that the ratio of deposits to loans must be less than 75%,” Jarrett said.
“A commercial banking licence would enable us to increase the deposit and loan portfolios, grow the JN brand, and support the expansion of our remittance business, JNMS (JN Money Services) Cayman Limited, through the provision of correspondent banking services,” he said.
The company has faced severe correspondent banking issues since 2014, when its then banker pulled the plug on JNMS Cayman, the company said in a press release. Although JN was able to resolve the issue at the time, it continues to face problems because of the perceived risks of money transfer businesses.
The JN Group said it hopes to launch its commercial bank in Cayman soon and expects to provide greater access to the unbanked in Cayman.
Jermaine Deans, who was appointed managing director in December 2019, is tasked with leading the JN Cayman transformation process, which will model the new bank on its sister commercial bank in the UK.
“This will be supported by a strong use of technology, including online banking and ease of access of service,” Jarrett said.
Last year Jamaica National established JN Bank in the UK as the first Caribbean-owned bank in that country, with both a digital presence and a physical branch in Brixton in South London.
The launch of the UK bank was motivated by the need for correspondent banking services and to provide greater financial inclusion for the unbanked and underbanked, including the Caribbean community, in the UK, Jarrett said at the time.