Business Journalist David Rose says NCB Financial Group’s (NCBFG) recent capital injection of $10 billion to its subsidiary is most likely why the company is considering an APO.

In September, NCBFG announced that its board of directors had approved an additional public offer of 300 million new shares. Shareholders will vote to approve the offer at an extraordinary general meeting after this year.

Speaking on Taking Stock with Kalilah Reynolds, Rose explained that National Commercial Bank Jamaica (NCBJ) has received $9.7 billion from NCBFG as companies prepare for Basel III next year.

Basel III is an international standard requiring financial institutions to have more cash in reserve in case of emergencies. As Jamaica’s largest financial institution, NCBJ will be required to have more cash in reserves.

Rose said that this is likely why NCBFG is considering an APO.

“Because where would NCB Financial, the parent company, get that money in the first place to give NCBJ? Remember they’re a holding company,” he said.

“Other than the management fees or dividend income they get from NCBJ and other subsidiaries, they literally don’t earn any other form of income. So it’s likely that NCB Financial took on additional debt recently to give NCBJ that capital injection,” he explained.

Rose said that NCBJ’s issued ordinary share capital moved from $6.5 billion to $16.2 billion for the third quarter.
The implementation of Basel III has been pushed back several times and is accepted to be completed in early 2024.