Sagicor Bank VP heads new cambio, remittance business with AFSL takeover

FINANCIAL CONGLOMERATE Sagicor Group Jamaica has deepened its business in the financial services sector with the completion of the acquisition of 100 per cent of Alliance Financial Services Limited, AFSL, and has promoted a second-tier bank executive to the groups C-suite as CEO of the new subsidiary that is expected to drive new business and growth in its cambio and remittance space.

Vice-President of Treasury at Sagicor Bank, Omar Brown, has been picked to lead AFSL, which is being integrated as a wholly owned subsidiary in the Sagicor Group with the regulatory approval of the acquisition and the restoration of AFSLs cambio and remittance licences for the April 4 restart of business under new ownership and management.

Sagicor Group President and CEO Christopher Zacca says AFSLs network of subagents, through which it had grown the business, rather than taking the business in-house into the service operations of existing Sagicor entities, will be the operational model by which Sagicor will pursue the new revenue streams.

The AFSL subagents have largely been retained. Our strategy is to grow this network, Zacca told the Financial Gleaner on Tuesday.

Alliance was previously licensed to operate five cambios in Kingston, St Catherine, Clarendon, and Manchester, all of which it have been re-accredited by regulator Bank of Jamaica, BOJ. It also operated as a primary provider of MoneyGram remittance service through a network of 68 subagents, including grocery stores, pharmacies, and microlending agencies.

MoneyGram remittance is also offered by Lasco Financial Services Limited, JN Money Services Limited, and VMBS Money Transfer Services Limited.

On April 1, Sagicor and BOJ confirmed in media releases the completion of the AFSL acquisition, which Sagicor announced in early February. Sagicor said then that it had entered into a definitive agreement to purchase all the shares of AFSL in a deal that was subject to due diligence and regulatory approval.

Under the new ownership structure, AFSL has satisfied the banks due diligence requirements. In that regard, effective 23 March 2022, AFSL is licensed to offer cambio and remittance services at approved locations, the BOJ said in a release on April 1.

The Sagicor team is excited to work with the experienced and professional team members and subagents of Alliance Financial Services. We expect to continue the already- established tradition of excellent service to the public and position the business for robust growth, Zacca said in the news release last week.

The acquisition cost of the AFSL takeover has not been disclosed by Sagicor. In December 2020, AFSL had launched an initial public offering of shares seeking to raise around $2 billion from the sale of 1.2 billion of its eight billion ordinary shares at a price of $1.59 per share, via the stock market. The offer valued the company at around $12.7 billion.

The IPO was subsequently suspended and withdrawn from the market due to what the company said was to due to related to an entity connected to its principal shareholders. Later, two affiliates of the company faced the court on charges of breaching the Bank of Jamaica Act, which was viewed, but never affirmed by Alliance, as the likely reason for the derailment of the 2020 IPO bid.

In late 2020, AFSL reported that it controlled about 8.4 per cent of the remittance business in Jamaica, and estimated that it conducted 30 per cent of all MoneyGram inbound transactions with remittance inflows for September 2020, which were estimated then at US$239.2 million. The company said then that it also accounted for roughly seven per cent of the almost $4 billion in cambio transactions between January and June 2020.

For 2021, the BOJ reported total remittance inflows of US$3.5 billion, with remittance companies accounting for US$3 billion of this amount.

The acquisition of AFSL is aligned to the groups overall strategy for growth, as it will allow the company to move into new business segments and expand our product offerings to our clients, Zacca as he announced the takeover bid in February.

The cambio and remittance licences held by AFSL, as well as its ability to operate in BOJs regulatory sandbox for financial technology providers, were suspended by the central bank on December 3, 2021, one day after criminal charges were brought by the Financial Investigations Division against its principals and two affiliated companies.

On December 2, 2021, Alliance Investment Management Limited and Alliance Finance Limited, along with their president, Peter Chin, and Vice-President Robert Chin, were charged with various breaches of the Bank of Jamaica Act, the Banking Services Act and the Proceeds of Crime Act stemming from investigations that began in 2018.

In court, Alliance Finance entered a guilty plea, while the case against the Chins in their personal capacity were set to be dropped by the prosecution.

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