Filling the Gaps

Wendy Ho Sing, the latest addition to Cental Bank’s top management,  says while this county’s regulatory framework is almost on par with international standards, there are gaps in it. “I don’t think that we are that far away but a lot of updating needs to be done,” she said with a Trinidadian accent that has not been diluted over the 25 years she spent in Canada. One such legislative and glaring void she sees is the one on mergers and acquisitions. Ho Sing, who has been appointed Deputy Inspector of Financial Institutions, was giving her views at her first official  press conference at Central Bank executive offices last week. Ho Sing took her  questions in stride, giving measured and articulate responses.

Her appointment took effect from February 1, putting her squarely into the bank’s management team. But one of her first assignments will be to look at the existing financial legislation and to see how it can be tweaked to meet the changing financial landscape. She said, for instance, that while the transfer of the insurance sector to Central Bank was a good thing,  the legislation needs to be looked at and updated. On mergers and acquisitions, Ho Sing felt that the present legislation was “quite silent” noting that it  must not be left to companies to structure the rules. Mergers and acquisitions, she said,  were a global challenge for all regulators. She was asked her view on the recent acquisition of Republic Bank by Clico, a company owned by business tycoon Lawrence Duprey.

Both the Central Bank and the Securities Exchange Commission (SEC) gave their blessings to the deal. She said such a development had two things going for it: TT’s  sound financial system and the built-in protection for investors and depositors. She said at one time the Canadian government tried to restrict foreign banks taking over local ones as well as the merger of Canadian banks, noting that it was felt that the concentration of such risk was bad for investors.  Moreover, the government felt that such a merger was not going to serve the needs of their customers. The banks, she said, argued for economies of scale. “You have to be careful,” she said of mergers and acquisitions, noting that it must always be made in the interests of all parties.      

She said both mergers and acquisitions were phenomena that must be looked at in TT, stressing that they must not lead to the development and concentration of risk in the market. The same thing, she said, applied to banks taking over insurance companies. She thinks legislation would spell out exactly how things ought to be done. On the  TT banks’ foray into the region and all the cross border activity taking place, Ho Sing thinks this presents regulatory challenges. She drew a parallel with Canadian banks moving into Hong Kong, UK and Japan, saying that financial players must be aware of risks they bring to the market. “It all comes down to ensuring that the parent company is not exposed to risk,” she says. She said she was all for amending and updating legislation but regulators had to make sure that it was applicable to TT.