Take a very critical view of proposed UTC/FCB merger

Members of the business community are advising Prime Minister Patrick Manning and his government to take a very critical view of the proposed merger between State-owned companies First Citizens Bank (FCB) and the Unit Trust Corporation (UTC).

Manning on Thursday announced that government is considering a “serious suggestion” that the UTC be merged with the FCB. He said Government was trying to streamline the corporate arrangements before deciding whether the company should go public or be merged with FCB. But Peter Clarke, Managing Director, West Indies Stockbrokers Limited (WISE) said such a move needs to be looked at very carefully because the two institutions are very different in nature. He said the strength of the UTC has always been its independence and it has dealt with a wide range of clients and institutions who value that independence. “My initial opinion is that it needs to be looked at very carefully because the two institutions are very different in nature. I think one needs to thread very carefully and examine all the ramifications before any merger can be seriously considered.”

Richard Young, Managing Director, Scotiabank and president, Bankers Associ-ation of Trinidad and Tobago (BATT) believes that it is an idea worth exploring because “there is some logic in it.” He explained that the UTC deals basically with mutual funds while banks issue mutual funds. However, he said all aspects of such a merger need to be explored before any serious decision is made. “It certainly needs exploring because there are legal issues and issues of ownership among others which have to be considered. Additionally the concept has to be examined to see how feasible it is.” Young said the matter of whether FCB is going to be privatised also has to be  addressed. “The Prime Minister talked about public ownership and that also has to be taken into consideration. They have to envision what happens after a merger if it is going to be a public company.”

The suggested merger was being contemplated even as the Government was considering making UTC a public company. Manning explained that plans for making the institution public may even be considered if there were to be a merger between UTC and FCB, but stated that, in any event, the Government’s policy was to have “the widest possible participation at all levels of society in terms of share ownership in State enterprises.” Anthony Hosang, president, Trinidad and Tobago Manufacturers Association (TTMA) said while organisations were doing well and are very successful right now, he does not know “how they will fit.” “I do not know what the objectives are but if there is a benefit from the two organisations coming together then I guess that must be taken into consideration for such a move.” However, Hosang said the benefits must be substantial for all parties involved before any action is taken to merge both entities.