The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

CIBC FIrstCaribbean has expressed its displeasure at fines imposed by Bahamian regulators in documents for its planned $240 million initial public offering (IPO) in New York.

The bank, in a section of the IPO document detailing regulatory risks, said it "disagreed" with two sanctions levied in the Bahamas last year that took total fines for 2017 to $78,000.

"Our failure to comply with... laws and regulations, even if the failure follows good faith effort or reflects a difference in interpretation, could subject us to restrictions on our business activities, fines and other penalties, any of which could adversely affect our results of operations, capital base and the price of our securities," CIBC FirstCaribbean told potential investors.

"Recently we have seen an increase in regulatory fines related to reporting that are typically [caused by] data errors regardless of materiality. In 2015, we paid regulatory fines in an aggregate amount of $1,675; in 2016 we paid no regulatory fines; and in 2017 we paid $77,800 in regulatory fines in the aggregate, which was primarily due to two fines in the Bahamas.

"We disagree with the fines imposed in the Bahamas in 2017, and so cannot assure you whether or not these types of fines were isolated incidents or will continue. In many of the countries in which we operate, we must seek regulatory approval to make material changes to our business such as make investments or pay dividends."

CIBC FirstCaribbean, in documents filed with the Securities & Exchange Commission (SEC), confirmed it is offering 9.6 million shares to investors at a price between $22-$25 per share - pegging the value at between $211 million to $240 million.

The issue's underwriters have also agreed to purchase 1.44 million shares and, if they take this up, CIBC's majority ownership stake in its Caribbean subsidiary will drop from 91.67 per cent to 70.67 per cent. If they elect not to do this, the Canadian bank's equity interest will fall to 73.41 per cent as it initiates a strategy to seemingly gradually exit the region.

FIrstCaribbean will remain listed on the Barbados Stock Exchange, but is delisting in the eastern Caribbean and Trinidad & Tobago. However, it will retain its Bahamas International Securities Exchange (BISX) listing, with the regional parent owning more than 95 per cent of its Bahamian subsidiary.

Anthony Blackman, a FirstCaribbean spokesperson, told Tribune Business via e-mail: "Nothing changes for our Bahamas shareholders who hold shares in FirstCaribbean International Bank Bahamas Limited."

Acknowledging the Bahamas' importance to its overall operations, CIBC First Caribbean's IPO document said: "We are a market leader in the Bahamas with approximately 18 per cent of the total market deposits and 21 per cent of the total market loans, according to our calculations based on June 2017 data published by the Central Bank of the Bahamas.

"Our market shares for corporate loans in our primary markets of Barbados, the Bahamas and the Cayman Islands were 43 per cent, 30 per cent and 50 per cent, respectively, and for corporate deposits were 29 per cent, 20 per cent and 20 per cent, respectively."