Feb 2009 Financial News

Coming home. Government seeking to reacquire BNB shares

Feb 20, 2009

GOVERNMENT has decided to reacquire a majority share in the Barbados National Bank (BNB).

Prime Minister David Thompson made the announcement yesterday afternoon following the weekly Cabinet meeting, which focused on the fallout from the global financial crisis and the situation with CL Financial in Trinidad and Tobago.
Thompson said that he expected to enter into discussions with the Government of Trinidad and Tobago and its Prime Minister Patrick Manning on the issue in the near future.

In March of 2003, a 57 per cent share of BNB was sold to Republic Band Limited of Trinidad and Tobago, and this shareholding was later increased to 65 per cent. Thompson acknowledged that the share price of BNB had been rising and Government would have to buy them at market price, but said, “It’s being done in the national interest and we have to find the resources at the appropriate time.”

The Prime Minister indicated that local and regional partners in a joint-venture on the project were welcome, such as the credit union movement, business people, and Barbadians living overseas, all of whom might view their money as safer in Barbados than elsewhere. He stressed the fact that Barbados had the third-best regulated banking system in the Western Hemisphere. “Against that background, the absence of what one might consider an authentic Barbadian bank is something that is regrettable and we think that as part of our national interest and patrimony that it would be desirable to go that route.”

During last July’s Financial Statement and Budgetary Proposals, Thompson said that Government would be seeking to sell shares in both BNB and the Insurance Corporation of Barbados to fund the upgrading and expansion of the Queen Elizabeth Hospital, since as a minority shareholder it could not direct the strategy of either company.

The Prime Minister also said Government had agreed to a $15 million Tourism Industry Relief Fund (TIRF) for the current financial year. The objective of the fund is to assist failing properties in the sector to remain in business and the maintenance of employment, he said, adding that more funds may be provided in the coming financial year. This assistance for the sector in addition to the $20 million provided to the Barbados Tourism Authority recently.

Addressing the impact of the economic downturn, Thompson explained it was difficult to say exactly how many jobs had been lost in Barbados, but said mainly construction and tourism were affected, and that Government’s capital works programme was aimed at helping to get people back to work in these areas. He revealed that anecdotal indications from tourism officials showed the sector had not performed badly this month the island was doing “reasonably well” on the whole.

Furthermore, Thompson said Cabinet will soon consider the appointment a seven-member Council of Economic Advisors, and that Dr. Frank Alleyne has been chosen to head the body. “The purpose of that Council is essentially to monitor the economic programme that we have put in place, both the recommendations of the Working Group on the economy as well as what you might consider to be Government’s economic programme in terms of the execution of our capital works projects ... investment in our economy ... maintenance of employment, and issues such as that.”

Referring to developments in Antigua and Barbuda resulting from charges of fraud in the United States against that country’s billionaire investor, Sir Allen Stanford’s, Stanford International Bank, Thompson said “this is something very troubling to us, obviously it has implications for the Eastern Caribbean banking arrangement, and we certainly have an interest in the success of the Eastern Caribbean economies because these are our major trading partners.”
He said Government would soon be meeting with Eastern Caribbean leaders to develop a collective response to ensure the stability of the respective financial sectors.


Source:
Nicholas Cox
Barbados Advocate
Friday February 20, 2009

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