PanCaribbean winding up asset management
Published:Friday | June 11, 2010 | 12:00 AM
Hunting improved efficiency and lower costs, PanCaribbean Financial Services Limited (PCFS) is winding up its asset-management subsidiary, PanCaribbean Asset Management Limited (PCAM), and merging its unit trust management activities into the mainstream operations of parent company, PCFS. But the move, the company's chief executive has maintained, will not see a diminishing of its unit trust activities.
According to Donovan Perkins, president and chief executive officer of PCFS, the exercise is expected to save the company some $3 million per year, which it would have otherwise spent to do separate financial audits for its asset-management company.
"PCAM runs us $2.5 million in audit fees annually, so what we are doing is to wind it up and transfer the activities from PCAM to PCFS, eliminating the cost of annual audits ... all those costs have disappeared, so it's an efficiency drive," Perkins said.
"PCAM will be wound up in 2010, reducing costs and improving our efficiency, without sacrificing service or investment returns of the country's best performing unit trust funds," a statement in the company's annual report said.
PCAM is 100 per cent owned by PCFS with its principal activity being the management of the company's three unit trust products, Sigma Solution, Sigma Liberty and Sigma Optima. The company also carries out other fund-management activities. At the end of 2009, according to PanCaribbean's annual report, assets under management grew by 13 per cent to $3.4 billion, driven mainly by gains in Sigma Solutions and Optima. At the end of its financial year in December, asset management saw its total gross revenue falling to $191.5 million, down from the $282 million it recorded for the same period last year. PCFS has already given up its asset-management licence with just the legal work now remaining.
"The Financial Services Commission licence was surrendered for PCAM in Q4 (the fourth quarter) last year and all team members were transferred to PCFS," said Perkins.
Assumed oversight
Last year, Perkins assumed oversight of PCAM following the departure of Steven Gooden to rival stock broker NCB Capital Markets, after having managed the PanCaribbean subsidiary for over two years.
Still, Perkins noted that PCFS remains excited about the unit trust market.
"As a matter of fact, what we are dying to see is for people to start new unit trust products, (and) being one of the larger and older unit trust managers we expect to rise with the tide," said Perkins.
With an annual return of 17.68 per cent for its Sigma Solution, 21.93 per cent for Optima and Liberty outperforming the others with 28.22 per cent, PCFS noted that the Sigma funds have been top-ranked in the unit trust market.
PCFS is one of four players operating in the market, Scotia DBG Investments, Barita and Capital and Credit being the other managers of unit trusts.
Only recently, the Financial Services Commission lifted the moratorium on the registration of new unit trust, a move industry watchers said was designed to encourage brokerage companies out of repurchase agreements-based products.
In the meantime, the commercial banking arm of PanCaribbean has been making good strides, according to Perkins.
"What we are seeing is a fair amount of success, savings both on Jamaican-US dollar side, the number of accounts are growing and average balances are also growing."
In light of the Jamaica Debt Exchange, PCFS said it has also begun a programme to reduce the impact of lower investment rates by adjusting its liability costs while expanding the marketing of its commercial product offerings.