Nov 2012 Financial News

Banks shareholder being made 'an attractive offer'

Nov 26, 2012

Managing Director of Republic Bank, David Dulal – Whiteway told the Barbados Advocate that pertaining to the bank’s offer, “A lot of the investors are now holding various meetings to make a decision, we have had some applications coming in from small individual shareholders. We are still hopeful the offer will be successful as it is an attractive offer.”

Republic Bank had originally acquired 57 per cent of the shareholding in the Barbados National Bank in 2003 and has since increased its holdings to 65.14 per cent.

Republic Bank is offering all other shareholders to purchase their stock in the bank for BDS$5 (TT$16.28) per share, and this offer will close on December 4. The last traded price for Republic Bank (Barbados) shares on the Barbados Stock Exchange was Bds$5.50 (TT$17.91). In October 2010, Republic had offered the remaining shareholders Bds$5.57 a share. The traded price is now Bds $5.00.

The Managing Director explained, “$5.50 was a traded price ... last year and the market changed significantly since then, we look at it from the point of view what were people willing to buy at and what they were they willing to sell at just before the offer. People were willing to buy at $3.00 and sell at $4.00, the $5.00 from that perspective is an attractive price”.

The price “5.50 took place a year ago if you asked for that now no one would buy it, that price is a theoretical based on something that happened a year ago, things have changed. The price earnings however are still high, over 19 times, which when we first bought in the operation it was 12 times.”

Dulal–Whiteway continued, “If you look at the 5.00 price, don’t compare it with 5.50, it was a year ago, the basis is what people are looking to buy and sell at. Therefore the price offered is very attractive.”

In terms of the National Insurance selling its shares, he indicated, “The National Insurance will be having their board meeting next week. What I would like is that the NIS to sell their shares and use the prices of that sale to come back and invest in Republic Bank itself. We are willing to work with them to find the equivalent amount of Republic bank shares or even more. Republic Bank as a group is a good story, if you look at our performance, our shareholders got a 17 percent return on their investment in Republic, dividend yield of 4 percent. For the last 10 years our share price move from TT$34 to T$106, our dividends per share increase three fold from TT$1.25 to TT$4.25 per share.”

“Organisations like the NIS could garner a great investment to use cash to get back in Republic Bank and if anyone else wants to make that kind of investment we are well geared in finding those shares for them.”

Whiteway reiterated, “It is an attractive offer the returns are good as an investor, if one really wants to remain invested in a bank stock, sell your shares in Barbados because you are selling them at 19 times earnings and buy into Republic which trades at only 15 times earnings, so you actually have a premium on the share here over Republic and get a pretty good return.”

“We encourage people to look at the offer, those who want to stay invested in bank stock take the cash in this offer and use that same cash to buy into Republic Bank.”


Source:
By Nadia Brancker
Barbados Advocate
Monday November 26, 2012

http://www.barbadosadvocate.com/newsitem.asp?more=business&NewsID=27937