New parent for VM Group under financial holdco restructuring

Victoria Mutual Building Society, a mortgage bank with various non-banking companies under its wings, has received board approval and a nod from the Bank of Jamaica to restructure the group – a move that will strip VMBS of its rank and obligations as the parent company.

The mortgage banking group also includes VM Investments, VM Property Services, VM Properties Limited, VMBS Money Transfer Services, VM Pensions Management, VM Wealth Management, VM Finance (UK), VM Overseas (UK) and affiliate companies, online lending platform Carilend, and general insurer BCIC – all operating under the umbrella of VM Group.

Under the restructured operation, the recently rebranded VM Group will create three new entities.

VM Financial Group will become the parent company for all the financial companies, including VMBS. VM Innovations, a fintech company it created in 2020, will play the role of a holding company for the group’s non-financial companies, such as VM Property Services Limited, while the third company, VM Group Limited, will replace VMBS as the parent company and will hold subsidiaries VM Financial Group and VM Innovations.

Accordingly, the voting rights that depositors have as members of VMBS will be transferred to the newly formed mutual holding company, VM Group Limited.

The VM Group is undertaking the proposed restructuring in compliance with the requirements of the Banking Services Act of 2014, but it also notes the reorganisation would give the group greater operational flexibility by removing VMBS, a regulated deposit-taking institution, as the group’s parent company.

Proprietary building society

VMBS said it will convert from a mutual building society to a proprietary building society under a court-sanctioned scheme of arrangement, which requires approval from the majority of its members.

“What that allows us to do is to have greater flexibility within the structure to raise and deploy capital into various business lines where the group sees fit. VM Group Limited is not a deposit-taking institution and will not have the obligations that would be attached to a bank,” VM Group Chief Legal, Compliance and Risk Officer Keri-Gaye Brown told the Financial Gleaner.

The Banking Services Act, which was brought into operation in September 2015, requires a corporate group that includes both non-financial and financial entities, inclusive of a banking operation, to be reorganised by separating the financial service companies from the non-financial companies. Licensing regulations for the financial holding companies were issued in 2019.

VMBS recently received its ‘no objection’ letter from the Bank of Jamaica, after submitting the requisite paperwork to the central bank last March. The next step is to secure Supreme Court approval to convene a special members’ meeting to gain approval of the members, after which the proposal to restructure will be put to the court.

“We are now in that process of securing a court date,” said Brown. “Once we have that date, we will convene the meeting with the members within 30 days,” she said.

The broad transformation programme, VM Group Chairman Michael McMorris says, will be undertaken so as to “dynamically meet the evolving needs of its members and the group’s drive to thrive in the global financial marketplace”.

VM Group says it will be focusing on diversifying products and services, recreating a more digitally focused operation, establishing cross-border alliances, and doing more transactions in Latin America and the Caribbean.

VM Group has approximately 330,000 members, but the 143-year-old financial institution is going after one million members by 2025, tripling its current base.

VMBS, the building society, is one of only two operating in Jamaica. As of March 2022, its assets were valued at $163 billion and its loan book at $106 billion. Scotia Jamaica Building Society was a distant second with $23 billion in assets and $19 billion in loans.

For year ending 2020, the VM Group held total assets of $166 billion, inclusive of a loan book valued at $77.68 billion. Its full-year results for 2021 are not yet publicly available.

karena.bennett@gleanerjm.com