The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FirstCaribbean's parent has taken another step towards selling-off its ownership by filing a registration form with US regulators for the bank's proposed New York Stock Exchange (NYSE) listing.

The amount of shares, nor the price that they will be offered to investors at, was disclosed in the Form F-1 registration statement that CIBC FirstCaribbean International Bank submitted to the Securities & Exchange Commission (SEC).

And, while the bank plans to de-list in Trinidad & Tobago and the eastern Caribbean, there was no mention of any such action in the Bahamas.

CIBC FirstCaribbean International Bank is the Bahamas International Securities Exchange's (BISX) largest stock by market capitalisation, although less than 5 per cent of the shares are held by Bahamian private investors. Any Bahamian de-listing would thus significantly reduce BISX's market cap, but there appears to be no intention to de-list the bank's Bahamian subsidiary at the moment.

The Form F-1 touted FirstCaribbean International Bank as "a market leader" in the Bahamian commercial banking industry, with an 18 per cent share of total deposits and 21 per cent of total loans. "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," the bank said.

CIBC FirstCaribbean International Bank (Bahamas) was also said to be holding some $444 million worth of Bahamian government debt, with its importance to the bank's overall operations shown by the fact it accounted for the largest share of revenue during its 2017 financial year.

The $154 million top-line generated during the year to end-October 2017 represented 29.7 per cent of the total, although the $27 million produced for the first quarter of the current financial year was just 25.5 per cent - placing the Bahamas' share slightly behind Barbados. When it came to deposits, the Bahamas' accounted for 20.2 per cent of the group's total, its $2.122 billion coming in behind only Barbados and the Cayman Islands.

Reuters last year reported that FirstCaribbean's Canadian parent, CIBC, viewed the New York 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. If so, that would bring FirstCaribbean effectively 'full circle'. The bank was created in 2002 from the merger of CIBC and Barclays' Caribbean operations, with the deal always viewed as the first stage in an 'exit route' for the UK bank. Barclays did just that four years later, and now it appears as if CIBC is about to do the same - albeit by a different 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.