Jan 2007 Financial News

RBTT AND REPUBLIC – TWO CARIBBEAN BANKING ICONS -: George Alleyne

Jan 31, 2007

RBTT Financial Holdings Limited, in the midst of speculation that First Caribbean International Bank (FCIB), a subsidiary of Canadian Imperial bank of Commerce, may seek a 14 percent shareholding interest in it as well as a possible merger, demonstrated a continued improved performance and further growth potential in the nine-month period ending December 31, 2006 which belie any need for a merger.

The bank’s pre-tax earnings of $863 million were seven percent higher than for the corresponding period in 2005, while the pre-tax profit of $283 million for the third quarter represented a significant increase of 10 percent over the same period in 2005! In turn, the profit “attributable to shareholders for the nine-month period showed an increase of four percent over the similar period for 2005. This meant that shareholders who had received $1.90 per share for April 1 - December 31 portion of 2005 received that and four percent more, a total of $1,98 per share for April 1 - December 31, 2006.

Since investors, whether large or small, are interested both in their company’s performance and its growth potential, then with RBTT showing the two, RBTT investors are having likely to regard the profit-potential climate of the bank as conducive to yielding their shareholder involvement to any foreign investor bid, whatever the source.

While the reported possibility of a 14 percent shareholding stake in RBTT by First Caribbean International Bank, a public company listed on the Trinidad and Tobago Stock Exchange, may appear modest, nonetheless no one should ignore that a 20 percent shareholding presence in Trinidad Cement Limited by the Mexican cement giant, gave CEMEX a not insubstantial base when it made its ultimately failed take-over bid for Trinidad Cement. For the record CEMEX was a literal whisper away from succeeding and it was only the determination of a hard, immovable core of domestic investors, including employees, who held approximately 5.4 percent of the shareholding; the Trinidad and Tobago Unit Trust Corporation - 3.94 percent; the National Insurance Board - 3.55 percent and Government - 9.11 percent that kept the flag of pride in national ownership flying amid all the take-over winds that blew.

The Canadian Imperial Bank of Commerce, acting vicariously through First Caribbean International Bank is not interested, if reports are correct, merely in a 14 percent shareholding in RBTT Financial Holdings, but is looking at a merger. Are we to assume then, that the next stage, should the reports be on target, would be a take-over bid. This would be a reversal of the policy position of the Administration of late Prime Minister, Dr Eric Williams, which in the 1970s set about the localisation of foreign owned banks operating in Trinidad and Tobago. A notable exception to this policy has been Citibank (Trinidad and Tobago) Limited.

Under this policy thrust, the Canadian bank operating in Trinidad and Tobago, Royal Bank, would become localised and its name evolve to RBTT Financial Holdings Limited, while Barclays (Dominion, Colonial and Overseas), a financial institution, owned and headquartered in the United Kingdom, would have its Trinidad and Tobago branch undergo an ownership and name change, and is today known as the Republic Bank.

It would be more difficult today, for a foreign financial house, Canadian, British or otherwise to attempt a take-over of, say, Republic Bank than it would be in the case of RBTT Financial Holdings Limited, and even a RBTT take-over given the awakened national pride and the bank’s handsome and continued healthy increase in dividends to shareholders, will be tough. Specifically, in the case of Republic Bank, a commanding block of shares, perhaps even as I write the majority is owned by CL Financial, interestingly a privately owned company.

Meanwhile, the first quarter ended December 31, 2006, of Republic Bank’s current financial year “Group profit attributable to shareholders” rose by a distinctly remarkable 46.2 percent over the same period for the last financial year. For the record, the figures provided for RBTT Financial Holdings Limited and Republic Bank have come, in the case of RBTT from the Chairman’s Report of Consolidated Financial Highlights of Group Chairman, Mr Peter J July.

And in the matter of Republic Bank, the Chairman’s Statement of Mr Ronald F de C Harford, Chairman. The two financial institutions are Caribbean banking icons. Each bank has a broad Caribbean spread and in addition to being a crucial contributor to the development of Trinidad and Tobago has assisted in the Member States of the Caribbean Community of Nations.

George Alleyne
Newsday
http://www.newsday.co.tt/commentary/0,51601.html
Wednesday, January 31, 2007.