The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Fidelity Bank (Bahamas) has beaten its capital-raising target by $5 million, generating $23.5 million from a combination of preference shares and its debt paper programme.

Michael Anderson, president of RoyalFidelity Merchant Bank and Trust, which acted as the placement agent and adviser for its affiliate, yesterday told Tribune Business that the BISX-listed commercial bank had exceeded the $15 million goal set for the notes (paper) segment of its private placement.

On top of the $20 million raised from investors via that security, Mr Anderson disclosed that Fidelity Bank (Bahamas) also gained an extra $3.5 million in preference share capital, increasing this from $11.5 million to a new $15 million total.

The RoyalFidelity president explained that apart from expanding the commercial bank’s long-term capital base, the ‘paper’ issue was part-designed to replace a maturing debt tranche.

The Series D tranche of Fidelity Bank (Bahamas) $50 million ‘note’ programme matured at end-May 2015, and Mr Anderson said the initial goal was to both replace this $7 million and raise an extra $8 million.

“One of the note programmes matured at the end of May,” he told Tribune Business. “We ended up redeeming it on May 29.

“There was $7 million outstanding on the initial offering. The bank went out on a $15 million offering, redeeming $7 million and raising an extra $8 million.”

The Series D-replacing paper issue, though, was oversubscribed by $5 million as investors kicked in a total $20 million.

And, with the $3.5 million in new preference share capital, Fidelity Bank (Bahamas) has raised a total $23.5 million from Bahamian investors via private placements within the past several weeks.

“They added $3.5 million to their capital base to support their growth,” Mr Anderson told Tribune Business.

“They’d like to have some supply of short-term funds in addition to shorter term deposits.”

Fidelity Bank (Bahamas) successful capital raising will likely have received a boost from the prevailing ‘low interest rate/high excess liquidity’ environment in the commercial banking system, coupled with the absence of alternative high-yielding investments.

The capital injection comes just after the BISX-listed bank revealed a 45 per cent year-over-year net income increase for 2014, shrugging off a “near tripling” in its Business Licence fees.

The bank was able to withstand this “major earnings drag” and generate an almost $4.5 million net income increase - from $9.735 million in 2013 to $14.126 million.

Fidelity Bank (Bahamas) saw its bank and business licence fees jump from $652,994 to $1.929 million year-over-year, largely due to the 3 per cent Business Licence fee imposed on the commercial banking industry in the 2013-2014 Budget.