Fri | Dec 6, 2019

Gilinski Group buying two-thirds of FirstCaribbean

Published:Friday | November 15, 2019 | 12:46 AMSteven Jackson - Senior Business Reporter
Head office of CIBC FirstCaribbean’s country operation in Jamaica.
Head office of CIBC FirstCaribbean’s country operation in Jamaica.

The Gilinski Group of Colombia will pay US$797 million for a two-thirds stake in CIBC FirstCaribbean, while Canadian bank CIBC will keep roughly one-quarter and the minority shareholders will hold the balance, according to statements from CIBC.

Reports of the sale were first reported last month.

The size of the acquisition will trigger takeover bid rules in Barbados and Trinidad & Tobago where the FCIB, stock trades, according to CIBC in the statement.

In T&T, for instance, a takeover bid is triggered once a single shareholder acquires 30 per cent or more of a stock. But investors there are not scurrying to trade FCIB. Its volumes remain small, and the stock is down 8.5 per cent for the week and 3.5 per cent for the month on the T&T Stock Exchange, where it traded Wednesday at TT$8.40. The situation is even more lacklustre on the Barbados Stock Exchange where the price remains at BDS$2.80, with no activity recorded so far in November.

“FirstCaribbean will remain the strong entity it is today, committed to servicing its clients in the region,” stated Jaime Gilinski, chairman of GNB Financial Group Limited, in a CIBC statement on the matter. “I have been impressed by the strength and stability of FirstCaribbean and am excited about its prospects for the future.”

Under the deal, the FirstCaribbean shares will be acquired by GNB Financial Group, a Cayman Islands-based company. GNB is wholly owned by Starmites Corporation which, in turn, is the financial holding company of the Gilinski Group, which has banking operations in Colombia, Peru, Paraguay, Panama, and Cayman Islands with approximately US$15 billion in combined assets.

GNB will pay a total consideration of US$200 million in cash, and use financing provided by CIBC for the remainder. The agreement is expected to be completed in 2020, subject to regulatory approvals.

FirstCaribbean International Bank will continue to operate under the leadership of its existing senior executive team with the present functions continuing to support the bank’s “strategic” business units, CIBC said in a statement issued on Wednesday.

Following the close of the transaction, GNB will hold 66.73 per cent of FirstCaribbean, and CIBC 24.9 per cent.

The deal values FirstCaribbean at US$1.195 billion.

The bank suffered losses in the region throughout the last decade due to bad loans, but regained profitability in recent years.

CIBC FirstCaribbean describes itself as the largest chain of banks in the English- and Dutch-speaking Caribbean with more than US$1.2 billion in equity and US$11.5 billion in total assets up to July 2019. The bank has more than 2,700 staff, 57 branches, 22 banking centres, and seven offices in 16 regional markets.

The bank offers a full range of market-leading financial services in corporate banking, retail banking, wealth management, credit cards, treasury sales and trading, and investment banking.

steven.jackson@gleanerjm.com