The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Fidelity Bank (Bahamas) top executive has pledged that its long-awaited stock split will occur before its end-July 2023 annual general meeting (AGM) as it targets a share price in the $5 range.

Gowon Bowe, the BISX-listed lender's chief executive, joked to Tribune Business that he dare not face the bank's shareholders without this happening as he confirmed that it is targeting either a three-for-one or four-for-one stock split. Given that the stock closed at $18 per share yesterday, the latter appears the most likely option.

That would mean Fidelity Bank (Bahamas) shareholders will receive three shares for each current one that they own. Mr Bowe, while affirming the stock split is "still in progress", revealed that it had been delayed due to the need to reform and "modernise" the bank's memorandum and articles of association - its founding documents - so that the split can be effected.

Likening the situation to redeveloping a home, he told this newspaper that "when you take up the flooring to put down new tiles you sometimes find more challenges than you expect" as he pledged that the stock split is receiving renewed focus at both Board and senior management level.

Mr Bowe told this newspaper: "When we went about commencing the stock split exercise, some of the statutory documents needed updating in terms of authorised capital and the way it was structured.

"We ended up doing amendments to all the Articles of Association to facilitate the stock split, and also modernising them since we were already having to make amendments. I know there is enthusiasm, if you will, by the shareholders to have that [stock split] done, and that's an oversight on my part.

"But we're still having discussions as part of the legal process that have to be completed in terms of the memorandum and articles that accompany the stock split, and modernisation of the statutory records. As that is completed, the mechanism for the stock split will take effect. We're hoping that will be done within six weeks once we approve the modifications and articles of association."

With Fidelity Bank (Bahamas) having set Wednesday, July 26, for its AGM, Mr Bowe pledged that "the stock split will be done by whatever date that is". He added: "I know I cannot stand on the podium at the AGM, or in a Zoom format, without it being in effect."

Stock splits are nothing new to the Bahamian capital markets. Commonwealth Bank, FOCOL Holdings and Cable Bahamas are just a few of the other BISX-listed companies to go down this route in the past. They are typically done to make an in-demand stock more affordable to retail investors, in particular, as well as broadening liquidity, boosting trading volumes and expanding the investor base.

"We're actually looking potentially at four-to-one, so we have some wiggle room as to where we end up," Mr Bowe disclosed of Fidelity Bank (Bahamas) plans. "The share price has consistently been trading at $17-$18, so it will be a three-for-one or four-for-one. If it is three or four, it will put us in the $5 range, which is what the target is."

However, he pointed out that the value of each investor's holdings in Fidelity Bank (Bahamas) will not change as a result of the stock split. "The value of the securities does not change by the number of shares in existence," Mr Bowe said. "That's not to diminish the desire of shareholders."

The BISX-listed retail bank, which is 75 percent majority owned by its parent, Fidelity Bank & Trust International, currently has around 30m shares issued and outstanding. Based on the present $18 share price, that collectively values the bank at $540m - a value that will not change regardless of whether there are 90m shares, or 120m shares, in existence.

"A greater number of shares and lower price per share has been shown in various markets to create greater liquidity, but that is usually a temporary increase in liquidity and it levels off to pre-stock split levels," Mr Bowe told this newspaper. "It's one of those where there's no harm to having it. It has no benefit, but if it addresses the demand of shareholders we as a Board and management have a responsibility to carry it out. It will not have any detrimental impact."

The Fidelity chief acknowledged that the stock split may have taken "a back seat" in recent months to the bank's growth strategy, 2022 annual audit, and a focus on "keeping the value of the company up", but it was now firmly on the agenda of both Board and management.

Mr Bowe said the revisions to Fidelity Bank (Bahamas) memorandum and articles of association, which were appropriate when the bank was formed in 1978, were needed to ensure they kept up with modern times and were fit for purpose. He pledged, though, that the changes will "not lessen or in any way reduce shareholder rights".

"All modifications and enhancements have been going back and forth with legal advisers and consultants, and that has been going on since October last year," Mr Bowe said. "We focused out attention on the audit and retaining value in the first quarter. We're turning out attention back to it. It's not the start of the process; it's the end of the process that's coming up."