Feb 2009 Financial News

Legal hurdle in BNB share buyback

Feb 25, 2009

ANY EFFORT BY BARBADOS to acquire a majority stake in the Trinidad and Tobago-owned Barbados National Bank may be thwarted by a legal minefield.

That warning has come from Byron Blake, a former assistant secretary-general of CARICOM, who said in New York that provisions of the treaty establishing the CARICOM Single Market and Economy (CSME), could prevent Trinidad and Tobago from selling the majority stake in the BNB exclusively to Barbadians so they could own the profitable financial institution once again.

"There is no legal way that you can ensure that Barbados gets back the bank by preventing others from buying the shares," Blake told the DAILY NATION. "That's the problem. In other words, if there is a bank out there and you are putting the shares out to the private sector in the region, you can't just discriminate against which private entity can buy the shares. It couldn't be a situation in which the shares are available to Barbadians exclusively."

Barbados' Prime Minister David Thompson announced a few days ago that the Government would encourage a private sector-led effort to re-acquire a majority stake in the BNB that was sold several years ago by the previous Owen Arthur Administration to the CLICO-owned Republic Bank.

While the Barbados Government itself wouldn't be buying the shares now owned by Republic Bank of Trinidad and Tobago, the goal, Thompson said, would be to place the BNB back in Barbadian hands. He said he planned to raise the matter with the government of Trinidad and Tobago and would seek to encourage Barbadian investors, including credit unions and the Diaspora, to buy the shares.

But Blake, who until recently was the economic coordinator of the Group of 77 Developing Countries and China at the United Nations said that any such move could trigger a host of legal challenges that would have to be resolved in court.

"This matter is covered in the investment provisions of the CSME," he explained. "Any citizen in the region would have the same right to invest in any other country as citizens of that country. So, if a Trinidadian has the same right to invest in Barbados as Barbadians how then can you put it (block of BNB shares) on the market and say only Barbadians can have access to it."


Source:
Tony Best
Nation News
Wednesday February 25, 2009

http://www.nationnews.com/story/2418000554981.php