A con­nect­ed par­ty of Michael Lee-Chin, the chair­man of the NCB Fi­nan­cial Group (NCBFG), sold 22,708,700 shares in the re­gion­al fi­nan­cial ser­vices com­pa­ny last Fri­day, 16 days af­ter the May 24, 2023 an­nounce­ment that Lee-Chin “is tak­ing a leave of ab­sence im­me­di­ate­ly from the boards of NCBFG, Na­tion­al Com­mer­cial Bank Ja­maica and Guardian Hold­ings Ltd (GHL).”

In the statu­to­ry no­tice an­nounc­ing the im­me­di­ate leave of ab­sence, NCBFG said Lee-Chin it would “al­low him to fo­cus on cer­tain press­ing busi­ness and per­son­al mat­ters,” and that he an­tic­i­pat­ed these mat­ters tak­ing ap­prox­i­mate­ly three months.

Fri­day’s sale of the block of 22,708,700 shares took place across the floor of the Ja­maica Stock Ex­change (JSE) at the price of about J$68 a share and would have re­sult­ed in gross pro­ceeds of about J$1.54 bil­lion (about US$10 mil­lion).

The share sale amounts to 1.50 per cent of Lee-Chin’s list­ed share­hold­ing in NCBFG of 1,505,187,375 shares and is 0.92 per cent of the fi­nan­cial con­glom­er­ate’s 2,466,762,828 is­sued share cap­i­tal.

NCBFG is list­ed on both the JSE and the T&T Stock Ex­change (TTSE), both of which man­date that di­rec­tors and se­nior ex­ec­u­tives of list­ed com­pa­nies must dis­close trad­ing in their com­pa­ny’s stock.

Lee-Chin’s in­volve­ment in the sale of the block of shares was con­firmed by NCBFG’s cor­po­rate sec­re­tary, Dave Gar­cia, in an email to the Busi­ness Guardian on Tues­day night, in re­sponse to ques­tions on the con­nect­ed par­ty sale of shares.

In the email, Gar­cia said: “We un­der­stand that there may be ques­tions re­gard­ing the re­cent fi­nan­cial trans­ac­tions of the Ho­n­ourable Michael Lee-Chin, OJ and his as­so­ci­at­ed en­ti­ties, which in­volve the sale of a small por­tion of his NCB Fi­nan­cial Group Ltd (NCBFG) shares and the liq­ui­da­tion of cer­tain per­son­al as­sets.

“As you have point­ed out, the shares sold ac­count for less than one per cent of the to­tal out­stand­ing NCBFG shares.

“Our un­der­stand­ing is that these ac­tions are dri­ven by his di­verse in­vest­ment ob­jec­tives, some of which he has pub­licly shared, and are per­son­al. They do not have an im­pact on NCBFG or its strate­gic di­rec­tion.

“Mr Lee-Chin con­tin­ues to main­tain con­fi­dence in NCBFG, re­main­ing our ma­jor­i­ty share­hold­er and ex­press­ing his com­mit­ment to main­tain­ing this sta­tus.

“The NCB Group re­mains strong and se­cure. This is demon­strat­ed by our con­sis­tent com­pli­ance with all reg­u­la­to­ry cap­i­tal stan­dards. These facts, cou­pled with our on­go­ing prof­itabil­i­ty, ex­hib­it the re­silience of our busi­ness mod­el amidst eco­nom­ic chal­lenges.”

Al­though NCBFG de­clared an au­dit­ed af­ter-tax prof­it of J$39.922 bil­lion (US$266.14 mil­lion) for its 2022 fi­nan­cial year, the com­pa­ny opt­ed not to pay a div­i­dend in its last fi­nan­cial year.

In its 2022 an­nu­al re­port, NCBFG said the fac­tors in its de­ci­sion not to pay a div­i­dend for 2022 in­clud­ed: the frag­ile geo-po­lit­i­cal sit­u­a­tion in Eu­rope; “the po­ten­tial for fur­ther cen­tral bank rate in­creas­es im­pact­ing cap­i­tal via the fair val­u­a­tion of in­vest­ment as­sets;” and reg­u­la­to­ry de­vel­op­ments in some of its ter­ri­to­ries along with the im­ple­men­ta­tion of IFRS 17 and Basel II frame­work.

IFRS 17 re­quires a com­pa­ny to mea­sure in­sur­ance con­tracts us­ing up­dat­ed es­ti­mates and as­sump­tions. Basel II is an in­ter­na­tion­al busi­ness stan­dard that re­quires fi­nan­cial in­sti­tu­tions to main­tain enough cash re­serves to cov­er risks in­curred by their op­er­a­tions.

In re­spond­ing to the Busi­ness Guardian ques­tion, the NCBFG cor­po­rate sec­re­tary pro­vid­ed in­for­ma­tion that was not re­quest­ed, when he out­lined: “We un­der­stand the im­por­tance of div­i­dends to our share­hold­ers. Our com­mit­ment re­mains strong to re­in­state div­i­dends at the ear­li­est op­por­tu­ni­ty, in ac­cor­dance with our pru­dent fi­nan­cial man­age­ment and cap­i­tal re­ten­tion strat­e­gy.

“We are ded­i­cat­ed to bal­anc­ing share­hold­er re­turns with the long-term fi­nan­cial sta­bil­i­ty of our in­sti­tu­tion, as this is in the best in­ter­est of all stake­hold­ers.

“Trans­paren­cy re­mains a core busi­ness prin­ci­ple and we will con­tin­ue to pro­vide time­ly up­dates to stake­hold­ers.”

Lee-Chin’s de­ci­sion to sell the US$10 mil­lion block of shares in the com­pa­ny he found­ed comes as he seeks to di­vest as­sets to raise US dol­lars.

Guardian Me­dia and me­dia hous­es in Ja­maica have re­port­ed his at­tempt to dis­pose of his sev­en-bed­room, 8,400-square foot man­sion on Grand Cay­man’s Sev­en-Mile Beach for an ask­ing price of US$35 mil­lion.

Last month, he was al­so re­port­ed to have sold his su­pery­acht, AH­PO, for US$362 mil­lion (J$55.8 bil­lion), a US$62-mil­lion pre­mi­um to what he paid for the ves­sel in 2021.

Lee-Chin, who was placed on the Forbes mag­a­zine’s list of bil­lion­aires in 2010, is al­so re­port­ed to have sold a me­dia busi­ness in Ja­maica, a pri­vate hos­pi­tal in Kingston and a 250-acre beach­front prop­er­ty on the north coast of the is­land.

In a Zoom in­ter­view last month with Dashan Hen­dricks, the busi­ness con­tent man­ag­er of the Ja­maica Ob­serv­er, Lee-Chin said he took the leave of ab­sence be­cause he want­ed to fo­cus on a re­cent­ly ap­proved can­cer treat­ment and on clean en­er­gy us­ing nu­clear pow­er, specif­i­cal­ly small mod­u­lar re­ac­tors.

“Those two ar­eas of busi­ness have re­al­ly tak­en off sig­nif­i­cant­ly and they need to be put on sol­id foot­ing. Ad­di­tion­al­ly, the chief op­er­at­ing of­fi­cer of one of my com­pa­nies in Cana­da de­cid­ed to move on at the end of May. So I had to jump in to sub­sti­tute for him un­til I find somone else,” said Lee-Chin in the in­ter­view.

NCBFG has al­so faced some is­sues in the re­cent past.

On May 12, 2023, the group re­port­ed af­ter-tax prof­it for the six months end­ed March 31, 2023 of J$6.338 bil­lion, which was a de­cline of 58.53 per cent com­pared to the J$15.285 bil­lion it earned for the com­pa­ra­ble pe­ri­od in its 2022 fi­nan­cial year.

NCBFG’s drop in prof­it for the pe­ri­od Oc­to­ber 1, 2022 to March 31, 2023 was dri­ven by the 51.67 per cent de­cline in its net rev­enues from the group’s in­sur­ance ac­tiv­i­ties, which fell to J$7.696 bil­lion in March 2023 from J$15.925 bil­lion on March 31, 2022, ac­cord­ing to the fi­nan­cial con­glom­er­ate’s half-year unau­dit­ed fi­nan­cials.

The Ja­maican com­pa­ny’s prin­ci­pal in­sur­ance hold­ing is its ma­jor­i­ty stake in Guardian Hold­ings Ltd (GHL), the West­moor­ings, Trinidad com­pa­ny.

Asked whether there is any con­cern at GHL about Lee-Chin’s sale of the block of 22,708,700 shares, the T&T com­pa­ny’s pres­i­dent, Ian Chi­napoo told the Busi­ness Guardian: “I ac­tu­al­ly was not aware of the trade, but has no con­cern as this is a very small per­cent­age of his over­all hold­ing of 1.5 bil­lion shares and this is not an un­usu­al trans­ac­tion.”

NCBFG’s share price has de­clined by 39 per cent on the TTSE for the pe­ri­od De­cem­ber 31, 2022 to June 13, 2023.

The NCBFG share price closed at $2.78 on Tues­day. On Sep­tem­ber 30, 2019, NCBFG trad­ed on the lo­cal stock ex­change at $10.44, which means the group’s share price de­clined by 73.3 per cent be­tween the end of the com­pa­ny’s 2019 fi­nan­cial year and Tues­day.