The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A trade union leader is today hoping to today discover whether CIBC’s efforts to exit majority FirstCaribbean ownership have hit “the end of the road” following the collapse of a $797m deal.

Teresa Mortimer, the Bahamas Financial Services Union’s (BFSU) president, told Tribune Business she and other CIBC FirstCaribbean worker representatives wanted to find out “the next step” after efforts to sell a controlling 66.73 percent equity stake to the Colombia-headquartered GNB Financial Group were confirmed to have fallen through.

The union chief, who represents around 300 of the bank’s Bahamian workers, said she was especially eager to learn in today’s meeting with senior management executives whether Canadian-based CIBC has now ended plans to sell majority control of its Caribbean subsidiary or whether it will keep the bank on the market and up for potential sale.

“I think we’re going to see exactly whether they continue it or not,” Ms Mortimer told this newspaper “GNB did collapse, but is that the end of the road? I don’t think so. We’re going to have to see where they go next. That’s what we’re waiting to see tomorrow [today].

“What’s the next step? Are you going to keep CIBC on the block for sale? You’re making a profit, maybe not what you want, but you are making a profit. The Bahamas is still a profitable economy, and I don’t see the doors closing. What is your next step? Are you going to take the bank off the shelf?”

Ms Mortimer described the collapse of the GNB deal, which was unveiled in late 2019 prior to the COVID-19 pandemic, as “a relief” and “a plus” for CIBC FirstCaribbean’s Bahamian staff who could go back to “business as usual” for the time being. She added that, when she met GNB’s chairman, Jaime Gilinski, had focused heavily on transitioning the bank to digital banking, raising fears of job losses.

The BFSU chief praised CIBC FirstCaribbean for its “partnership” approach and willingness to keep the unions informed, revealing that it informed them that the announcement of the GNB deal’s end at 7.20am yesterday morning prior to the release being issued.

The bank, in that release, said the sale was not proceeding because it “did not receive approval from FirstCaribbean’s regulators” although no further detail was provided. However, one highly-placed source, speaking on condition of anonymity, said simply that “the regulators didn’t go for it” in multiple Caribbean states.

“The regulators were not very comfortable and just focused on the pandemic, and the deal just fell apart,” the source said. “From what I understand it is really the regulators lost their appetite and couldn’t be convinced that the timing and everything else was right for this.

“They were distracted by COVID and the loss of activity in the market. The two parties at the top decided enough was enough. Even they may have lost their appetite.” The position of the Central Bank of The Bahamas on the transaction was unclear last night, although this newspaper understands it was not among the regulatory obstacles. John Rolle, its governor, promised to respond to this newspaper’s inquiries but nothing was received before press time.

“While this transaction would have supported FirstCaribbean’s long-term growth prospects, it is only one way of supporting growth for our bank going forward. CIBC has held a majority ownership stake in FirstCaribbean for a number of years, and there exists an excellent working relationship with a shared focus on meeting the needs of our clients” said Colette Delaney, its chief executive, in a statement.

“FirstCaribbean is a strong, well-run bank which is adjusting sensibly to the economic reality of the pandemic and is well-positioned to recover as the economies of the region recover. We remain laser focused on delivering on our strategy – providing our clients with first class service through a modern everyday banking experience and providing our employees with the best possible work experience.”

Harry Culham’s CIBC’s group head, capital markets, who oversees FirstCaribbean, added: “FirstCaribbean is focused on building deep, long-lasting client relationships in the Caribbean, optimising our business and enhancing efficiency over time. We remain committed to executing on our long-term strategy and delivering the best outcome for clients, shareholders, team members and communities.”

CIBC has been seeking to exit the Caribbean for some time, having previously abandoned attempts to do so via an initial public offering (IPO) that would have been listed in New York in 2018. The Bahamas produced 32.3 percent, nearly one-third or just over $188m, of CIBC FirstCaribbean’s $581m top-line in 2018, its $85m in net income generated 84 percent of the bank’s regional $101m bottom line.

The Gilinski Group has banking operations in Colombia, Peru, Paraguay, Panama and the Cayman Islands with approximately $15bn in combined assets.