T&T’s FCB won a country award at The Banker’s 2009 ceremony (link).
First Citizens Bank
Last year, Trinidad and Tobago was significantly affected by the meltdown of the largest conglomerate in the Caribbean, the CL Financial Group. This affected the whole of the local financial system and economy, and had a knock-on effect on First Citizens Bank’s loan book. Further, the government-owned bank had to assist with the restructuring of loan facilities, raising new capital and allocating management time to addressing the various issues arising from the crisis.
First Citizens Bank’s solutions not only helped the local economy, they also provided growth for the bank itself. The acquisition of some troubled institutions were turned to the bank’s advantage and confirmed its counterparty credit rating (BBB+/A2) by Standard & Poor’s, the highest among local banks.
“First Citizens, as a bank owned by the government, was called upon to assist with the management of the crisis,” says chief executive Larry Howai. “The end result has been the maintenance of stability within the local financial system. In addition, the bank was able to acquire a solid base of new customers from the [troubled] CL Financial Group and also acquired [Caribbean Money Market Brokers], one of the premier brokerage houses in the Caribbean. This has resulted in increased profitability, a 70% increase in the bank’s asset base and a presence in several Caribbean islands.”
Last year’s results have encouraged the bank to aim even higher for the future and to look at acquisition targets in the region.
“Our main focus in the coming year will be on risk management, close monitoring and management of our loan and investment portfolios and strategic expansion in key markets,” says Mr Howai. “This latter will include potential acquisition opportunities both locally and in the Caribbean region.”
From a note issued by analysts at JP Morgan, emphasis mine:
The Central Bank late on Friday announced that it would bail out a number of financial services companies—Clico Investment Bank (CIB), Clico Insurance Company (CLICO), British American Insurance Company (BAICO) and Caribbean Money Market Brokers (CMMB)—within the CL Financial Group, which have recently been facing liquidity pressures. The government will take control of CIB and transfer third party assets and liabilities of both CIB and CMMB to First Citizens Bank (100% owned by the government and the second largest local bank with over US$2.4 billion in assets). The problems at CL Financial Group apparently stemmed in part from the sharp drop in methanol and real estate prices, but also from risky practices that included excessive related-party transactions. As part of the bailout plan, CL Financial will sell, liquidate or collateralize its assets and use the proceeds to meet funding requirements for both CLICO and BAICO and the government will provide full funding support to meet any remaining deficits; the fiscal cost of such support is still undetermined. The central bank governor emphasized that excluding CIB, T&T’s banking system is well capitalized (the average capital adequacy ratio stands at 18%) and is not facing undue liquidity challenges. While the situation is still fluid, at this juncture, we believe that Friday’s decision was a pre-emptive move to contain any contagion from the possible collapse of the CIB and do not believe that the troubles at CL Financial Group are symptomatic of a broader systemic problem. Separately, the central bank on Friday left the repo rate unchanged at 8.75% after its monthly policy meeting on the heels of December inflation data, which showed the CPI increasing 0.1%mom taking 2008 annual inflation to 14.5%yoy.
Verbatim, statement issued Jan 30
CMMB Assures Clients Their Investments are Safe
In light of the announcement today by the Central Bank regarding the CL Financial Group, CMMB wishes to reassure its clients that their investments with us are safe. CMMB continues to operate as an independent entity separately from Clico and Clico Investment Bank. We are the largest full service securities company in the Caribbean and have been in operation for over eight years. During this time CMMB has operated as a profitable company continuing to offer
safe and profitable investments to clients.
CMMB has met all commitments to our clients and will continue to do so. We will provide further details regarding the arrangement with First Citizens Bank butclients should be assured by the First Citizens’ proposed acquisition of CMMB.
First Citizens is wholly owned by the Government of Trinidad & Tobago and has the strongest rating of any financial institution in Trinidad & Tobago. Further assurance should be taken from the Governor of the Central Bank comments
that the objective of the Central Bank and the Government of Trinidad and Tobago is to ensure that all investors are protected.
For further information please contact:
Mr. Ram Ramesh – Managing Director & CEO, CMMB Limited
Tel: 623-7815 ext 2000 Email: firstname.lastname@example.org
Mr. Ramcharan Kalicharan – Chief Operating Officer, CMMB Limited
Tel: 623-7815 ext 2094 Email: email@example.com