The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Financial Services Union’s (BFSU) president yesterday voiced concerns about an early “red flag” that has been raised over CIBC FirstCaribbean’s proposed purchaser.

Theresa Mortimer told Tribune Business that initial checks with Colombian representatives of UNI Global Union (formerly Union Network International), the global trade union federation, suggested that the Gilinski Group was “anti-union” in how it operated its banking business in its homeland.

Emphasising that the BFSU expected any CIBC FirstCaribbean buyer to honour existing industrial agreements, Ms Mortimer said the union would know more about the bank’s plans today when she joins a conference call with its Barbados-based head office.

“Being part of Union Network International, we do have a counterpart in Colombia, and I wrote to my counterpart in Colombia about this group,” she told Tribune Business of the proposed CIBC FirstCaribbean buyer.

“This group in Colombia is an anti-union group. That sends a red flag. We have an agreement with this bank and that agreement doesn’t stop with any sale. You have to honour agreements that are in place. No if;s, and’s or but’s about it.”

Media reports, which first surfaced in Latin America last week, disclosed that the Gilinski Group is aiming to acquire a 70 percent majority stake in CIBC FirstCaribbean for around $2.2bn. The latter was yesterday tight-lipped on the deal, although it did not deny it.

However, K Peter Turnquest, deputy prime minister, confirmed to Tribune Business that a deal was imminent as he had been “introduced” to the prospective buyer. While no formal applications for the necessary government, Central Bank and Securities Commission regulatory approvals have yet been submitted, Mr Turnquest’s comments and Ms Mortimer’s remarks indicate this will happen shortly.

The BFSU chief said the union, which represents around 300 CIBC FirstCaribbean International Bank (Bahamas) staff, was waiting on the outcome of today’s conference call before formalising its position on the planned acquisition.

“We need to hear from them exactly what is happening and how things will go forward,” Ms Mortimer said. “I know for sure it [the bank] was on the market for sale. It’s been on the market for a while.”

She added that CIBC will be the second-owned Canadian bank to exit the region if the Gilinski Group deal goes through, with Scotiabank having departed the eastern Caribbean (its battles with the Antigua government notwithstanding) to retain a presence only in the larger, more profitable jurisdictions of The Bahamas, Jamaica, Barbados and Trinidad.

And Ms Mortimer said domestic retail banking jobs are coming under increasing pressure from moves to drive customers towards online and digital banking as their main avenues for accessing financial services.

“They’re forcing you to go there,” she said of the banks. “They need to teach you, but how can you force a 70 year-old persons to go to the machine? They have more comfort going into the bank. Older people are more valuable customers because they have more money. Do they want customers or not?”

CIBC FirstCaribbean International Bank (Bahamas), which is the largest listed stock on the Bahamas International Securities Exchange (BISX) by market capitalisation, is less than five percent owned by Bahamian minority investors. It is also likely to be the largest and most profitable unit in the group alongside Barbados, accounting for 30-40 percent of its overall business.

The Bahamian operation generated $85m in net income on $188m of revenues for the financial year to end-October 2018, the last period for which full-year results were available. That represented its highest profit in five years, with the bottom line for the prior three years varying between $66m and $77m.

The Gilinski Group is headed by Jaime Gilinski Bacal, who is said to be Latin America’s second richest man with a net worth of $3.9bn. The group has a history in banking that dates back to the 1990s, with a track record of turning around under-performing institutions, and it currently owns Colombian bank, GNB Sudameris, which has over $10bn in assets.

Mr Gilinski also has a $500m stake in Banco Sabadell, Spain’s fifth largest bank. However, James Smith, the former finance minister and Central Bank governor, has questioned whether CIBC FirstCaribbean under the Gilinski Group’s ownership would be able to maintain the necessary correspondent banking links to keep commerce moving through the clearance of US dollar transactions.

Under CIBC’s ownership, the Bahamian institution will have been able to clear through its Canadian parent’s worldwide network to overcome the regulatory difficulties and withdrawal of correspondent relationships suffered by other local and regional banks.