JN FINANCIAL Group has now finalised the sale of a significant stake in its JN Bank UK subsidiary to Step One Money UK, according to documents from Companies House in the United Kingdom. The sale price was not disclosed.

Documents on the Companies House website in the UK show the transaction was registered as complete with Step One Money UK registering on October 11, 2024 as the relevant legal entity controlling “directly or indirectly, 75 per cent or more of the shares” in JN Bank (UK). Step One Money itself is controlled by Michael Childress, a British national who lists his occupation as “company director” on the filings, and his business partner Jameel Jesani, a lawyer. Both own Step One Money UK equally and are directors of Step One Finance, a specialist consumer lending platform in UK. Step One Money UK was registered in June this year and was likely set up as the vehicle to purchase JN Bank (UK).

The sale of JN Bank comes just over four years after it became the first Caribbean-owned entity to receive a banking licence from UK authorities. JN Bank (UK) was launched in December 2019 as an authorised UK bank regulated by the Prudential Regulation Authority and the Financial Conduct Authority as a means to help its parent company in Jamaica reduce its dependence on banks in the UK to do transactions between its customers in Jamaica and that country. At the time, fearful of exposing themselves to tainted money and face sanctions from their regulators, banks in the UK and US started reducing ties, and in some cases, cut ties altogether with their counterparts in the region, a situation which impacted JN Bank and others. The issues which led to a breakdown in correspondent banking relationships between Jamaican entities and those in the UK and US were part of action items the country was told to deal with when it was placed on the Financial Action Task Force “grey list” in February 2020 (the country came off the list in June 2024), signalling to international financial and other institutions to take special care when transacting with entities and individuals from Jamaica, making transactions more expensive, if not impossible in some cases. Seeing the problem, Earl Jarrent, CEO of JN Group, speaking at an October 2020 official opening ceremony of JN Bank (UK), said he intended to also provide services for Caribbean banks that have had their correspondent banking relationships in the UK severed.

But plans for the bank will now take a different direction. People familiar with the transaction, who asked for anonymity because they were not authorised to speak publicly about the matter, told the Jamaica Observer they expect the name of the bank will be changed sometime next year. JN Bank (UK) has maintained a minority equity stake in the entity.

JN Bank, in disclosures accompanying its audited financial statements for the financial year which ended March 31, 2024, indicated it was in talks to divest the entity under pressure from the Bank of Jamaica to boost its capital. The central bank requires deposit-taking institutions to set aside at least 10 per cent of their own funds to cover potential losses from risky investments, a common minimum requirement for capital adequacy ratio, as specified by international banking regulations under the Basel Accords.

But that ratio was set at a higher level, 15 per cent, for JN Bank after the central bank determined that losses in certain assets, including JN Bank (UK) and JN General Insurance, presented a risk to the bank itself, according to people familiar with the matter. JN Financial Group recently announced, and in the process, confirmed a story first carried in BusinessWeek, that the entity was being sold to British Caribbean Insurance Company (BCIC). Both entities are likely to bring in $7 billion for the JN Financial Group. The bank will also raise additional capital, which, along with the proceeds from the sale of JN Bank (UK) and JN General Insurance, should result in “an approximately $12.3 billion impact on net capital”, JN Bank said in its audited statements, expressing that it expects all this to be done by March 2025.

The JN Group invested approximately £64 million to establish and capitalise the UK bank. JN Bank (UK) has assets of approximately £350 million as at March 2024. Since its launch, the bank has been rated as “excellent” by the consumer review site TrustPilot and received an award from the British Bankers’ Association.