Category Archives: Business & Finance

T&T Gov’t to bailout CLICO, British American and CLICO Investment Bank


Friday 30th January, 2009

CL Chairman, Lawrence Duprey confirms that government will intervene in CLICO, British American and CLICO Investment Bank.

Mr Duprey says this is just pre-emptive action and he does not believe that it will be a crisis.

Central Bank governor says CLICO manages 38 billion in assets or a quarter of the country’s gross domestic product.

The Central Bank will immediately take control of CIB. CIB’s banking license will be revoked after sale of assets.

Central bank governor assures CIB depositors that their funds are safe.

Government to provide funding for CLICO insurance portfolio in return for equity in CLICO.

CLICO to be returned to its core insurance business.

Central Bank governor says this is not the time to take advantage of CLICO’s situation. Not a time for competition.

Minister of finance, Karen Nunez-Tesheira says international firm to be hired to restructure CLICO, CLICO Investment Bank and British American.

First Citizens CEO, Larry Howai says CIB customers should refrain from visiting First Citizens branches.

First Citizens CEO says there are regulatory and legal issues to be worked out before monies can be paid out.

If you’re on Twitter, @keith_in_tnt had the scoop from the press conference. (H/T @nplaughlin)

Now, where was I?

First, some housekeeping.

To Mike, who commented on “This is not the time to not know what you’re talking about“, here is my belated response:

Mike – I stand by my assertion that Ms Marajh’s coverage of the RBC/RBTT deal was textbook, which is what irks you. You criticise it as “routine” – I invite you to show me a comparable piece of business coverage from any other reporter at a Caribbean publication. My intention was not to compare her work to that of the FT, the WSJ or the NY Times – and I have seen worse at all three of these papers – but to highlight her as an outlier amongst her peers.

Further, Ms Marajh did scoop the international media; the deal was small but significant for RBC from a strategic standpoint. Your criticisms of the story – e.g. “is RBTT bloated? Will there be
job cuts to generate cost savings?” are not unfair, but I would contend that they are usually addressed – even in the major papers – in secondary analysis pieces, or in the second take on the news. This is often because, especially in a deal that has not yet been made public, the details are not available and are secondary to the fact of the transaction.

Yes, the story would be considered routine at a major international daily; but the Express is not the FT. Given the dross typical of the content of our local newspapers, the coverage stood out.

You then criticize Curtis Rampersad’s Express story, which I characterised as having done a decent job of summarizing a complex topic. You contend: “I see no real understanding of the complexity of the situation facing financial markets. He mostly quotes local “experts” opining on the implications of the meltdown for local businesses. This isn’t journalism; it’s stenography.”

I riposte – there are very few journalists even at the WSJ and the FT who have a thorough grasp of this financial crisis. Indeed, there are but a handful of global policymakers who have not been proven to be out of their depth. And yet, despite Rampersad’s lack of expertise and his even further remove from expert sources than a journalist in the US or UK, he produced a decent story. And if he committed stenography, by your definition, then thousands of journalists across the world are doing the same every day.

Sometimes, you have to give credit where it is due.

This is not the time to not know what you’re talking about

Several months ago, I bemoaned T&T’s “apparent lack of reporters who actually understand business, finance, law”.

The absence of sufficiently qualified finance and business reporters from the halls of T&T’s newsrooms is even more galling now, as the global financial crisis deepens.

And make no mistake, it is a crisis – one that few people in the Caribbean seem to have heard of, and even fewer to understand.

A recent post over at Media Watch provides a compelling example of this disconnect. In it, the author of the blog – “Martine” – is taken to task by a reader over her description of the recent declines in the US stock market as a “crash”.

Good. Because while American equity markets have gyrated wildly in recent weeks, and have fallen quite preciptiously from their historic highs, they have not crashed.

But Martine makes two additional errors in that post.

First, she refers to her recent posts on the “US stock market crisis.”

There is no US stock market crisis. There is a global financial crisis – every equity market in the world has been hurt by the fall-out from what started as a meltdown in the US housing market. And the problems are not confined to equities (stocks) – credit (debt) markets have also been seriously affected.

Second, and more serious still, is this statement:

We hope Curtis Rampersad of the Express will take to heart your point as well, since he also referred to the issue as a crash in his story on the AIG bailout in the Wednesday edition.

“There will be no immediate fallout but the crash in the US financial system and a global recession may inevitably affect investors and consumers in Trinidad and Tobago, a financial expert has suggested.”

Rarely do I defend Express reporters, but Mr Rampersad did no such thing.

Rather, Martine is wrongly conflating two entirely separate issues – events that may be reasonably be described as having caused a “crash in the US financial system” and a panic in the US stock market, which is only a small part of the whole.

Mr Rampersad’s article as a whole does a decent job of summarizing a complex topic, and I will comment on it here (my comments are in brackets):

There will be no immediate fallout but the crash in the US financial system and a global recession may inevitably affect investors and consumers in Trinidad and Tobago, a financial expert has suggested.

(May inevitably? Grammatical quibbles aside, it is safe to say that investors and consumers in Trinidad and Tobago will be affected)

In addition, there are new concerns from international companies operating here who may be worried about the effects of the largest financial meltdown in the United States in almost a century.


Republic Bank’s senior economist Dr Ronald Ramkissoon said yesterday that the turmoil in the US markets at the weekend arose because people were encouraged to save and invest in a range of products in different countries and while the returns were great, it also meant that risks were higher.

(Not exactly, but a decent effort. The recent turmoil in the US markets – and again, credit as well as equity, to say nothing of commodities and currencies – reflects a collapse in investor confidence in the strength and viability of institutions that are heavily exposed to risky financial instruments, etc.)

The fates of major financial institutions Lehman Bros and Merrill Lynch redrew Wall Street’s financial landscape as the former has filed for Chapter 11 bankruptcy and the latter was forced to sell to Bank of America.

(Very good, but some context would be helpful. What do Lehman Brothers and Merill Lynch do? Why did the latter agree in principle to merge with Bank of America?)

They were brought down by billions of US dollars in losses arising out of risky real estate and mortgage transactions.

(Well done.)

He said there could also be concerns from energy companies operating here about insurance coverage issues following the meltdown in the US.

(Worst sentence in the piece. Unclear. Should have either been better explained or edited out completely.)

Monday’s New York trading also saw the American International Group, the world’s largest insurer, scrambling to raise capital to stay afloat.9

(Good, but context.Why did it need capital? What happened to its billions of dollars in assets? Also no mention that AIG is the parent company of Algico)

Ramkissoon said during a telephone interview yesterday that this was not the first time large institutions failed in the world.

(True, but not since the Great Depression in the US have so many failed so swiftly, and back in 1929 the world was neither so complex nor so interconnected)

At times like this, he said it was useful to take a long-term view as it would not last forever. He noted that falling stock prices could actually benefit investors once the market had bottomed out.

(Statements like this piss me off. Why is it useful? How could investors benefit? When will the market ‘bottom’? What about the interim?)

With regard to the current financial meltdown, Ramkissoon said: “I see this as a correction phase and when you take the long view, there comes a time when you have to roll with the punches.”

(If by rolling with the punches he means, “be spectacularly bailed out by the US government”, sure. The man is clearly a Keynesian – in the long run, we are all dead and what not)

Local investors and depositors at local commercial banks should not be worried “right now” as their investments were safe because financial institutions here did not engage in some of the risky ventures Wall Street firms executed.

(Tricky. How does he know that? And take RBTT – recently bought out by Canada’s RBC – how does you know that RBC has not engaged in risky ventures? There’s no evidence to back up this statemen, and therefore no way to judge its veracity)

He said people’s money was safe but cautioned that the global economic situation would affect locals through recessionary problems.

(Again, really? What about people who have invested in the stock market, which is always a risk? What about people who have invested in funds linked to the performance of overseas stock markets? What, exactly, are “recessionary problems”?)

The fall in prices for commodities like crude oil, the rise in global food prices, plus the negative effects on travel and tourism could affect countries like T&T, he added.

American Chamber president Eugene Tiah was also concerned yesterday about the financial troubles in the US.

“Clearly now there is a complexity in terms of investments. Companies and countries invest in complex ways and one area of concern may be how they are linked” to companies in the US, he said in a telephone interview from his Phoenix Park Gas Processors office at Pt Lisas.

(Now that’s a good quote)

These subjects are not easy to write about, by any means. But they are far too important to get wrong.