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CIBC FirstCaribbean's regional headquarters in Bridgetown, Barbados. (File photo)

Regulators block sale of CIBC FirstCaribbean

CIBC FirstCaribbean's regional headquarters in Bridgetown, Barbados. (File photo)

Canadian Imperial Bank of Commerce (CIBC) yesterday announced that the transaction that would have allowed GNB Financial Group Limited to acquire a majority stake in CIBC FirstCaribbean International Bank Limited has fallen through, as the transaction did not receive the approval of the Caribbean operation’s regulators.

CIBC will, as a result, remain as the majority shareholder in the Caribbean financial services group.

“While this transaction would have supported FirstCaribbean’s long-term growth prospects, it is only one way of creating value for stakeholders,” Harry Culham, Group Head, Capital Markets, CIBC, who also oversees FirstCaribbean, stated in a release yesterday.

Group Head, Capital Markets — CIBC Harry Culham (Photo: Sinai Health)

“FirstCaribbean is focused on building deep, long-lasting client relationships in the Caribbean, optimising our business, and enhancing efficiency over time. We remain committed to executing on our long-term strategy and delivering the best outcome for clients, shareholders, team members and communities,” he continued.

As it stands

A full range provider of banking services — corporate, investment, retail and business banking, as well as wealth management — CIBC FirstCaribbean operates within 16 jurisdictions in the region, including Dutch-speaking territories. The bank employs approximately 29,000 people across its network of 64 offices and branches.

CIBC will remain the majority shareholder in its FirstCaribbean operation after regulators failed to grant approval to the sale agreement with GNB Financial Group Limited. (File photo)

In December 2019, CIBC FirstCaribbean and its parent announced that it had reached an agreement with South American outfit GNB, which would purchase 66.73 per cent of the shares in the Caribbean operation, subject to the approval of local regulators.

In a press release posted on CIBC’s website, the bank disclosed that the sale of the Caribbean operation then valued US$797 million, with GNB paying US$200 million in cash.

CIBC to sell its majority stake in FirstCaribbean

Had the regulators approved the sale, CIBC would only retain 24.9 per cent of its Caribbean subsidiary.

A Caribbean perspective

Like her Canadian counterpart, CEO of CIBC FirstCaribbean Colette Delaney believes that the transfer of majority shareholding would have augured well for the bank’s “long-term growth prospects”; however, she also argues that it was not the only “way of supporting growth for our bank going forward”.

“CIBC has held a majority ownership stake in FirstCaribbean for a number of years, and there exists an excellent working relationship with a shared focus on meeting the needs of our clients,” she said.

CEO of CIBC FirstCaribbean Colette Delaney
(File photo)

“FirstCaribbean is a strong, well-run bank which is adjusting sensibly to the economic reality of the pandemic and is well-positioned to recover as the economies of the region recover. We remain laser-focused on delivering on our strategy —providing our clients with first-class service through a modern everyday banking experience and providing our employees with the best possible work experience.”

The bank will continue managing US$12 billion in assets while aiming to increase its current market capitalisation of US$2 billion.

A CIBC FirstCaribbean branch in the Cayman Islands (Photo: Cayman Marl Road)

In its annual report for 2020, which the bank released last month, Chairman David Ritch pointed out that, “The pandemic has also provided the opportunity for the bank to maximise the advancement of our digital
agenda, and even against the backdrop of the challenges faced by the team, we expanded and upgraded our digital banking services, with a resulting pleasing take up among clients, as persons opted to do their banking from home, rather than visit the branches.”