The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

CIBC’s top Caribbean executive yesterday said the bank had “no plans” for any further major outsourcing of jobs from the Bahamas, emphasising it was targeting the retail and private wealth management segments for growth.

Rik Parkhill, CIBC FirstCaribbean’s regional chief executive, told Tribune Business that the institution had been “investing in the Bahamas” in other areas of its business at the same time as it cut 66 jobs.

The majority of those cuts, revealed by Tribune Business in February this year, came from the consolidation of CIBC FirstCaribbean’s transactions processing/operations centre functions to Jamaica.

Mr Parkhill, speaking to this newspaper by phone from Barbados, told Tribune Business that the local redundancies were essential “to try and get scale and reduce costs” in a difficult operating environment.

Branch consolidations, both on Bay Street and in Grand Bahama, also factored into this strategy. “It’s just a drive to become more efficient, because when the economy is not performing, operating efficiency becomes increasingly important,” Mr Parkhill said.

The CIBC FirstCaribbean chief was adamant, though, that no further major Bahamian job losses are planned beyond the 66 cuts announced earlier this year.

“There are no plans to do any more than what was announced and executed,” Mr Parkhill told Tribune Business.

These cuts are being phased in via a process that will be completed next year, and Mr Parkhill added that the bank had largely succeeded in finding new posts within CIBC FirstCaribbean for the impacted employees.

He said “most” of those who left the bank did so via its voluntary separation programme, which have them “a bridge” into retirement in exchange for a severance package.

And, on the positive side, Mr Parkhill said CIBC FirstCaribbean had invested in, and was increasing employee numbers, within its private wealth management business and its CIBC Trust Company (Bahamas) unit.

The bank had also moved to “revamp” its retail branch network in the Bahamas via the opening of Carmichael Road some two years ago, plus the re-location to a smaller site on Bay Street in downtown Nassau.

“I think in terms of the Bay Street branch, it is smaller in terms of square footage, but it’s a more efficient banking centre in getting customers in and out more rapidly,” Mr Parkhill added.

With CIBC FirstCaribbean focusing on retail banking and private wealth management as key short-term growth areas, Mr Parkhill said he wanted to achieve a 48-hour turnaround time for “plain vanilla” loan applications by the 2015 first quarter’s end-January close.

This goal had been a key focus for the bank over the past three years, and he told Tribune Business: “What I’d like to be in a position to do by the end of the first quarter is to process at least plain vanilla loan applications in less than 48 hours.”

While processing would take longer if valuations of the underlying real estate collateral were necessary, Mr Parkhill added: “More rapid turnaround of loan applications will generally pay huge dividends for this bank, and increase our footprint.

“Retail banking in the Bahamas is a focus in terms of asset growth, as well as private wealth management. I think we’d like to expand our lending business generally in the Bahamas with our retail customers.

“And I think we see a great opportunity to expand our private wealth management business in the Bahamas. We’re in the midst of recruiting and hiring people for that.”

In a likely reference to the recent decision by CIBC’s Canadian rival, Royal Bank of Canada (RBC), to exit the private wealth management business in the Bahamas and the Caribbean, Mr Parkhill said such departures had created a greater opening than previously anticipated.

“Some of our competitors are pulling back from that, and there is an opportunity for us to grow the business at a faster rate than we anticipated a year ago,” he told Tribune Business.

Mr Parkhill, though, stopped short of saying CIBC FirstCaribbean would be interested in acquiring RBC’s Bahamian private wealth management portfolio.

He explained that the bank was more interested in growing organically, rather than through acquisition.

“We’ve been approached by customers of RBC who are worried about who their service provider is going to be,” Mr Parkhill revealed to Tribune Business. “I’m not sure that we’re interested in acquiring the business, as we prefer to build business on a customer by customer basis.”

The CIBC FirstCaribbean chief executive said the bank’s private wealth management business was distinct from CIBC Trust Company (Bahamas), as it was focused on domestic - rather than ‘offshore’ - clients.

“The focus has been more on clients that are persons resident in the Caribbean, or citizens of Canada, Barbados and the Bahamas,” Mr Parkhill explained on the private wealth side.

“If there are people that have specific ties to the Bahamas, they own a second home or invest in the business, we will target them as well. For people who do not have specific ties to the region, we’re not really interested in that business.”

Mr Parkhill added that CIBC Trust Company (Bahamas) was “performing quite well” and benefiting from its “strong footprint” in both this nation and the Cayman Islands, with its fund administration business enjoying a strong rebound.

Acknowledging that it was difficult for banks to grow at a faster rate than the underlying economy, Mr Parkhill said CIBC FirstCaribbean’s recent financial performance merely reflected its customers’ positions (and persistently high unemployment).

While he did “not have a crystal ball”, Mr Parkhill said it would likely “take a couple of years” for CIBC FirstCaribbean and other banks to work their way through the pile of non-performing loans in the Bahamas and wider Caribbean.

“But it doesn’t mean that we’re not going to grow the asset base in that time, and generate returns for shareholders,” he added quickly.

Optimistic that “the worst is behind us” in terms of losses and bad loans, Mr Parkhill said CIBC FirstCaribbean was well-positioned to exploit “a modest upturn” in private sector investment throughout the Bahamas and the Caribbean.

He expressed hope that this could lead to greater things, along the lines of ‘a rising tide lifts all boats’, and described CIBC FirstCaribbean as being in “recovery mode”.

“We’ve spent an enormous amount of time, effort and resources on repositioning and restructuring operations to be profitable in a lower growth environment,” Mr Parkhill told Tribune Business, praising his staff’s efforts.

“I think we’ve turned the corner. It’s still a difficult economic environment, but there are modest signs of recovery. We’re well positioned to take advantage of the recovery.”