by Rick Lowe
FirstCaribbean International Bank just circulated the following press release, refuting "inaccurate, irresponsible and unsubstantiated comments on the financial soundeness of FirstCaribbean International Bank (Bahamas) Limited".
In fact, they tell us their "Tier 1 capital ratio is $15.8% substantially in excess of the Central Bank’s minimum requirement of 8%."
Read the entire release below:
NEWS RELEASE
For Immediate Release
NASSAU, Bahamas, March 5, 2009 – We are disappointed at the inaccurate, irresponsible and unsubstantiated comments on the financial soundness of FirstCaribbean International Bank (Bahamas) Limited.
FirstCaribbean has today released its first quarter results, which show an $11.6m improvement in profitability compared to a similar period last year, with total assets in excess of $4 billion. Additionally, our Tier 1 capital ratio is 15.8%, substantially in excess of the Central Bank’s minimum requirement of 8%. FirstCaribbean International Bank Bahamas – which is a member of the CIBC Canada Group – is a financially and operationally strong financial institution firmly committed to continuity of the Bank’s operations in The Bahamas.
The Governor of the Central Bank in her Press Release yesterday, spoke to the financial soundness of the local banking system for which we are a part. I quote below from the Governor’s statement:
“Given the overall soundness of the banking sector, the Central Bank is therefore concerned about recent unsubstantiated material that has surfaced about the health of particular institutions. In the present environment, such unfounded assertions could unnecessarily exacerbate the uncertainty being experienced by customers, to the detriment of the financial system.”
We find the misinformation irresponsible. We encourage all customers to view our excellent results, which will be published in the press tomorrow. They reinforce the stability and health of FirstCaribbean International Bank (Bahamas) Limited. We are ultimately 93% owned by CIBC, a substantial Canadian banking group.
Hi Rick,
It’s an interesting development in FCIB history.
Just a few comments on that company:
I wrote an article on globalviewtoday, right after CLICO was taken over by the Central Bank of Trinidad about a month or so ago.
http://globalviewtoday.blogspot.com/2009/02/will-other-banks-follow-watch-and-see.html
The article was asking questions about the soundness of the inter-connected companies/banks in the region.
Upon review of the CLICO and the FCIB financials of the previous year, but not read the report on the current statement of FCIB to which that press release in the news papers were making reference to, I found the company “somewhat” sound and not in danger of second looks, just yet.
The part about their current capitalization and their connection to the Canadian banking industry, is little more than window dressing, really. You really have to examine the exposure and investment bottlenecks–i.e., real estate liabilities, capital market investment products (government and corporate bonds), current lending requirments and any current exposure to devalued assets, which have yet to be totally depreciated as in the US housing market and with US and EU companies.
The information on their positions, even before we examine how they re-capitalized–least of which was the charging of fees to depositiors who did not make the current cash amount on their savings and checking accounts– just recently, is something to make their claim of being well capitalized seem moot.
However, their connection to sound and ready capital from the Canadian Banking system, is something that is soemthing to be thrilled about. That means they have access to money, when Canada, Suadi Arabia and China, are the only few countries with institutions, aside from the IMF, that are willing to lend.
While, too, information claiming their demise is rather rash. But, in order to not repeat the head in the sand approach to these types of issues, current updates and checks into their fitness is not out of the question.
Best,
Youri
http://globalviewtoday.blogspot.com/
Thanks for stopping by Youri.
I’m not sure that your comment”charging of fees to depositors who did not make the current cash amount on their savings and checking accounts– just recently, is something to make their claim of being well capitalized seem moot.” follows?
Hi Rick,
Poor choice of the term “moot”. However, the charging of fees by FCIB to depositors who don’t make a certain amount through a monthly period, is a cash raising exercize and probably netted them a few million or maybe more, throughout the region. And, will raise more money in the short term, until people just lose their “little” savings or just pull their money, out.
Also, their cost cutting efforts, one of which was rumoured to be job-losses here in the Bahamas, is something they have been very keen on through the bank as a whole throughout the region.
I don’t know if job cuts are a mandate for the Bahamas branch, but there is no better way to cut cost as they have done in other Caribbean countries.
In any event, I was trying to show– in not so many words– the linkages with cost cutting efforts and charging depositors, makes their report of being well capitalized and making a profit in the first quarter, seem marginalized. Also, FCIB, making a profit, in the midst of these cuts and in addition, slashing dividends, is something that also cancels itself out even further.
In a nutshell, 2005-2007 they cut operational cost by 25% or more. Dividends were also down between 05-07…have not seen the 08 end of year to this date, but have not researched for it since I wrote that first blog entry.
I know it takes time to produce and end of year. But, in the meantime, read the article I wrote and then make the linkages to what FCIB said, what I said earlier and what I’m saying, now.
Best,
Youri
http://globalviewtoday.blogspot.com/
Hi Rick,
Just a clarification on one thing I said, which I don’t want mis-represnted–
“I don’t know if job cuts are a mandate for the Bahamas branch, but there is no better way to cut cost as they have done in other Caribbean countries.”
Is meant to say that job losses have happened to the region as a whole and not imply that FCIB itself, has cut staff through the region–I don’t know of any report in the news that spoke to that.
I don’t think that anyone can deny that job losses, globally, and in the Caribbean, have been the first move to cut cost in companies.
I don’t want to be on the negative end of something I was trying to assist with.
Best,
Youri
http://globalviewtoday.blogspot.com/