Western Union to be converted into agency banks under First Global’s network

(Jamaica Gleaner) GraceKennedy group plans to expand its First Global Bank branch network across its Western Union locations in Jamaica, using the agency banking model.


The strategy could grow the commercial bank’s locations by 50 within three years, once the Bank of Jamaica approves agency banking regulations.

“If we start rolling out throughout Jamaica – let’s say to 50 of them – with the float of Western Union, that is going to be a game changer for First Global,” said Don Wehby at the food and financial services conglomerate’s annual general meeting in Kingston on Wednesday.

First Global Bank currently has six locations, and plans are under way to expand its Manor Park branch and set up a new branch in Ocho Rios. Western Union has 150 locations and handles approximately half of the US$2 billion in annual remittance inflows into Jamaica.

“The strategy is very clear,” said Wehby. “We are leveraging the relationship with GKMS with the launch of agency banking. In two to three years, First Global could be bigger than Scotiabank and National Commercial Bank Jamaica in terms of touch points.” GK operates Western Union through GraceKennedy Money Services (GKMS).

First Global is currently the fifth-largest bank of six in terms of customer deposits – around $21 billion at the end of 2014 – and it has a capital base of $6.9 billion. GraceKennedy recently injected an additional $850 million to shore up the commercial bank’s equity.

The GraceKennedy group CEO is hoping for agency banking regulations to be approved by yearend. The central bank has been working on it since 2013.

In the meantime, the conglomerate is testing its mobile wallet services. The pilot was already approved by the central bank and Wehby is seeking to fully launch the service by July.

“We are using internal staff to use the mobile wallet,” said Wehby. “By the end of this year, you are going to be able to put money on your phone; go to Western Union and get your cash and pay with it; and be able to go to Hi-Lo and use your phone to pay your bill.”

The Hi-Lo supermarket chain is also undergoing an expansion. The conglomerate spent $200 million upgrading the retailer’s Manor Park and Barbican locations, fitting them with more modern, efficient refrigerators, redesigning the layout, among other upgrades, which is expected to provide substantial savings.

“Revenue is already up by 20 per cent and with that margin we expect a payback in five years,” Wehby told the Financial Gleaner.