First Citizens Bank gets green light for restructuring

Trinidad-based First Citizens Bank (FCB) has gained the approval of its shareholders to restructure into a new group structure, which is set to take effect in October once all regulatory approvals have been satisfied.

The Government-owned financial conglomerate is aiming to restructure itself into a new holding company that will be known as First Citizens Group Financial Holdings Limited (FCG) or New Group HoldCo. This would free up FCB’s capital base and allow other subsidiaries to be held directly under FCG which could deploy capital directly and more efficiently. As it currently stands, FCB holds six direct subsidiaries under its ownership with two other subsidiaries held through First Citizens Investment Services Limited (FCI). The resolution surrounding the restructuring was approved by shareholders at the virtual annual general meeting held last Wednesday.

The amalgamation will be effected through the integration of NewCo (First Citizens Management Services Limited) and FCB into AmalCo. This will result in FCB becoming a wholly owned subsidiary of FCG with the shares of FCB being cancelled for existing shareholders but being replaced by shares of FCG.

There will be a vesting period to facilitate the moving of subsidiaries from FCB to become direct or indirect subsidiaries of FCG. October 1 has been set as the effective date through which this reorganisation will be effected with FCB shareholders getting their new FCG shares. FCG will be registered with the Trinidad and Tobago Securities and Exchange Commission before being listed on the Trinidad and Tobago Stock Exchange.

Following the restructuring process, First Citizenz Group will list on the Trinidad and Tobago Stock Exchange. (Fille photo)

FCB is currently in discussions with regulators in Guyana to acquire the banking operations of Scotiabank, which is selling its wholly owned subsidiary in the South American country. Scotiabank has been slowly reducing its exposure to the Caribbean but increasing its ownership in other South and Central American countries.

Scotiabank sold several Eastern Caribbean subsidiaries and its Belize operations but has increased its stake in the Dominican Republic and Chile. Scotiabank recently spent CN$500 million (US$400 million) to acquire an additional seven per cent stake in its Chilean operation from the Said family. Scotiabank now owns 83 per cent of the subsidiary which is currently its third-largest market.

A Scotiabank location in Guyana. First Citizens Bank is currently in discussions with regulators in Guyana to acquire the banking operations of Scotiabank, which will become a wholly owned subsidiary. (Photo: Stabroek News)

In an article posted in the Trinidad Express, FCB Chief Executive Officer Karen Darbasie was quoted saying, “We continue to look for more investments, but they (Barita) are investments that were done in the normal course of business to capitalise on potential for gains and/or returns so that we could continue to deliver the positive growth in our profits for all of our shareholders.”

Chief Executive Officer of First Citizens Bank Karen Darbasie (Photo: Maco People)

FCB bought an initial five per cent stake in Barita Investments Limited through FCI in the company’s September 2020 APO and increased its stake to 6.10 per cent in December.

FCB’s second quarter, which ended March 31, 2021, saw its net profit drop by 26 per cent to TT$134.39 million as its core net interest income dropped by 12 per cent to TT $375.01 million due to a reduction in business activity and higher credit impairment provisions for its loan book. Other income jumped by 27 per cent to TT$167.78 million. Net profit for the six months is down by 24 per cent to TT$308.1 million. Total assets for the group stand at TT$47.42 billion while shareholders equity closed the period at TT $7.58 billion.

— David Rose