Only two financial holding companies (FHCs) have so far been licensed by the Bank of Jamaica (BOJ), as part of its commitment to strengthening the regulatory framework for financial institutions in Jamaica.
The two licensed FHCs are NCB Financial Group Limited and JN Financial Group Limited. They were licensed as the BOJ embarked on the licensing of FHCs under the Banking Services Act (BSA) 2014 to improve consolidated supervision of financial groups.
This new regime became necessary in light of the growth of financial conglomerates in Jamaica.
The BOJ, in a statement today (March 22), updating on the FHC licensing regime, said international experiences highlight the importance of Jamaica having an effective consolidated supervisory framework to bolster the safety and soundness of the financial system.
The BOJ’s Supervisory Committee, in keeping with its authority to make supervisory rules to guide the operations of licensees and FHCs, has already issued supervisory rules for the licensing of FHCs.
The BOJ statement reads: “Every company intending to function as an FHC for a financial group, which includes a deposit taking institution (DTI) – a commercial bank, merchant bank or building society, is required to apply to the Supervisory Committee for a licence.”
BOJ advisory to the public
In the statement, the BOJ explains the licensing regime for an FHC.
“The BOJ takes this opportunity to advise the public of the key principles guiding the licensing of FHCs. Reorganisation is often a necessary first step to facilitate the submission of a credible application which would meet the criteria for a Financial Holding Company licence,” the bank articulates in its statement.
Continuing, the BOJ states that, “in those circumstances, a proposal for reorganisation is required to be submitted seeking the BOJ’s non-objection. The Bank’s consolidated supervisory framework pays keen attention to ensuring that all financial companies within the group and all entities facilitating financial services, including Special Purpose Vehicles that are related to, or controlled by a financial group, are included in the consolidated financial statements of that financial group”.
The BOJ was quick to point out that it does not automatically issue a Financial Holding Company licence following the issuance of the non-objection to group reorganisation.
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