A Government minister is proposing that Barbados and other regional countries unite to either buy, or establish, an international commercial bank in order to protect the region from the current threat of pullouts by foreign-owned financial institutions.
Delivering today’s Astor B Watts lunchtime lecture at the Democratic Labour Party’s George Street, St Michael headquarters, Attorney General and Minister of Home Affairs Adriel Brathwaite pointed to the recent decision by the Canadian Imperial bank of Commerce (CIBC) to sell its majority shares in FirstCaribbean International, which was later rescinded.
“I am fairly certain that we are going to have a challenge that we are going to have to take the bull by the horn as it were and address the whole issue of how do we ensure that there will be banking in this region for our people. And it is my recommendation that heads of this region consider either investing in one of the existing international banks; taking a majority shareholding and/or buying one; and/or forming one and taking it as international as possible,” Brathwaite said, adding that this would protect the region from having to depend on foreign shareholders or directors whose sole interest was profitability in their backyards.
He admitted though that there were issues with operating in the region but was insistent that the threat of pullout by foreign commercial banks “is a threat to us and that we have to address it.
“From a regional perspective . . . we should form, and/or acquire an international bank, so that when these issues arise, some shareholder or some director outside of Barbados don’t make a decision to move the bank, sell the assets and disappear and then we are scrambling because our people don’t have any banking resources,” Brathwaite stressed following the announcement by FirstCaribbean earlier this month that it had withdrawn its recent public offering made in the United States and was currently no longer pursuing a listing of its shares on the New York Stock Exchange (NYSE).
Back in December 2017, the Barbados-based regional financial institution announced that it had filed a registration statement with the US Securities and Exchange Commission relating to the proposed initial public offering (IPO) in the US of FCIB’s common shares in addition to seeking a listing on the NYSE.
However, in a brief statement today the company said that “in view of market conditions” it would no longer pursue the US public offering and NYSE listing at this juncture.
The development came on the heels of a recent announcement by its parent company, CIBC, that it was pulling out of Barbados and the rest of the region.
CIBC, which on October 14, 2002 joined with the London-based Barclays Bank PLC and combined their retail, corporate and offshore Caribbean banking business to launch CIBC FirstCaribbean, said it had decided to sell its 91.5 per cent shares in the regional operations on the North American market.
In view of these surprise developments, Brathwaite was adamant that the region could not take any chances, although he warned of naysayers who would point to the collapsed CLICO International Life Insurance Company.
At the same time, he pointed out that regional central banks which were responsible for regulating the sector were not known to have breached any international best practices.
“So I am not afraid of a regional bank being regulated by our central banks and being managed by us here in the region,” Brathwaite stressed.