Nov 2012 Financial News

Offer under review

Nov 13, 2012

THE National Insurance Scheme (NIS) is considering all of its options with respect to its holdings of Barbados National Bank (BNB) shares.

This was the word from NIS Chairman, Dr. Justin Robinson.

He was speaking in an interview with the Barbados Advocate at last Saturday’s Fortress Investment Forum held at the Errol Barrow Centre for Creative Imagination.

The NIS Chairman made these comments on the heels of a statement released by Republic Bank (Barbados) last Wednesday announcing that it had received regulatory approvals from the Barbados Government, the Central Bank of Barbados, and the Financial Services Commission to make an offer to purchase the remaining shares in the bank.

The Bank had originally acquired 57 per cent of the shareholding in the Barbados National Bank in 2003 and has since increased its holdings to roughly 65 per cent. Two years ago, Republic Bank had made an attempt to acquire the 35 per cent of the bank which it does not own, but had decided to discontinue the pursuit following a failure to agree on the share price.

According to the statement issued, an offer of BDS$5 per share has been put towards shareholders by Republic Bank, with this offer expiring on Tuesday, December 4, 2012. According its press release, if the offer is accepted by all remaining shareholders, this transaction will result in an injection of over BDS $166 million (US$83 million) into the domestic economy.

In light of this, Dr. Robinson indicated that, “The NIS is looking at all of the options right now. The options are that the NIS could decide not to sell any of the shares it has, it could sell some or it could consider an exchange of BNB shares for Republic Bank shares.”

As to whether the Government should divest its stake in the bank, the NIS Chairman stated that such a decision made by Government would be primarily political, whilst the decision of the Scheme would be based on investment objectives.

“I cannot really comment on that given that that is a political decision, whereas we [at the NIS] have to make an investment decision,” he noted.

Currently, shares outstanding in the former BNB stand at roughly 35 per cent, with holdings of approximately 18 per cent held by the Government of Barbados, 10 per cent by the NIS and the remaining 7 per cent by other companies and private individuals.

NIS not in need of cash at the moment

Dr. Robinson indicated that the Scheme was in no rush to liquefy assets as it is currently generating surpluses ranging from BDS$16 million upwards to BDS$31 million in a given month.

With limitations placed on the Scheme by the Central Bank of Barbados in making overseas investments, currently standing at 4 per cent of the Fund’s portfolio, the absence of suitable domestic investment options remained a major challenge to the NIS’s 3.85 billion dollar Fund.

“The issue for the NIS on the investment front is that at this point in the life of the Scheme, it generates surpluses. Now, these surpluses need to be invested and there is domestically an underdeveloped capital market – there is a lack of range of investments available on a monthly or annual basis, so there is that challenge,” Dr. Robinson outlined.


Source:
By Jenna Marshall
Barbados Advocate
Tuesday November 13, 2012

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