The Tribune

CIBC FirstCaribbean’s parent yesterday confirmed its subsidiary is exploring a US stock exchange listing, a move likely to stoke speculation of a Canadian bank withdrawal from the region.

The Barbados-headquartered bank, in a statement responding to a Reuters article, said it was “exploring a potential stock market listing of some of its shares” on the New York Stock Exchange (NYSE).

Emphasising that no decision had been made, it added: “A listing on the NYSE would provide CIBC FirstCaribbean with access to a larger investor base, enhanced liquidity, and greater access to capital.”

Reuters, though, suggested that the bank’s Canadian parent, CIBC, views the listing as a potential exit route from the Caribbean, where its business has been hit by high non-performing loan (NPL) levels in the Bahamas and elsewhere.

This, combined with the region’s slow economic recovery, high debt levels and restricted new lending opportunities, has depressed profits for all the Canadian-owned banks in a region they once viewed as a major earnings generator.

Reuters reported that CIBC had been seeking a buyer for its Caribbean operations, including the Bahamas, for the past two years but could not find a taker for the whole business. It added that the region’s low growth prospects had also pushed the bank to look for an exit route.

CIBC FirstCaribbean, together with Royal Bank of Canada (RBC) and Scotiabank, has been outsourcing back office operations from the Bahamas to lower-cost jurisdictions such as Jamaica and Trinidad, while also reducing staffing levels and closing branches - especially in the Family Islands.

Several observers have suggested that RBC’s digital banking drive is an indication it may, too, be looking to exit the Bahamas by selling the business, although its senior executives said the move was not a downsizing.

CIBC FirstCaribbean’s plans, which Reuters said involved listing up to 20 per cent of its shares on the NYSE in the first instance, with further sell-offs potentially to come, are likely to increase speculation about Canadian bank plans for the region.

The move, which would involve a listing of CIBC FirstCaribbean’s Barbadian parent, would not directly affect its Bahamian subsidiary by itself. The bank is the largest listed stock on the Bahamas International Securities Exchange (BISX) by market capitalisation, although just over 4 per cent of the shares are in the hands of local investors.

The majority 96 per cent stake is owned by that Barbadian parent, and the Bahamas subsidiary contributed almost half its $143 million net income in the year to end-October 2016, producing a $70.573 million bottom line.

Keith Davies, BISX’s chief executive, yesterday said that based on the details revealed to-date, CIBC FirstCaribbean’s proposed US listing would have no impact for Bahamian shareholders given that they only hold securities in the local subsidiary.

He added, though, that the Bahamas could be impacted if CIBC FirstCaribbean decided to follow Emera’s lead and offer to buy-out the Bahamian minority shareholders, and/or it elected to de-list its local affiliate and instead offer Bahamian Depository Receipts (BDRs) to investors. 

CIBC FirstCaribbean yesterday said it had “delivered strong operating performance and financial results over the last three years”, with adjusted net income of $123 million in 2015 rising to $153 million for the year to end-October 2017.

The bank said this was equivalent to a compound annual growth rate (CAGR) of 11 per cent, and added: “We have demonstrated continued market share gains, with greater than average market growth across most geographies and business segments.

“We have achieved this by offering a superior client experience and technology interface, together with our full suite of products and services. This trend is set to continue, and we remain focused on delivering excellent service to our clients and providing the best possible return on investment for our shareholders.”