First Citizens: Honour $1.8B CMMB deal

“I received a request from the First Citizens Bank today to underwrite the commitments of the last government to honour what they undertook on behalf of the Government which today amounts to $1.8 billion. That’s a new thing that came up today and everyday we go through these larger and larger problems,” said Dookeran. He was speaking during a motion on the adjournment raised by Diego Martin Northeast MP Colm Imbert.

First Citizens Bank CEO Larry Howai yesterday confirmed the bank’s request and revealed that it was made in relation to the bank’s acquisition of Caribbean Money Market Brokers (CMMB) under the terms of a supplemental agreement drawn up subsequent to the Memorandum of Understanding (MOU) of January 30, 2009. CMMB had racked up a substantial debt due to loans to parent company CL Financial.

“What happened is when we acquired CMMB, CMMB was owed money by the CL Financial Group,” Howai said. “We had told the government at the time that we would only acquire CMMB if they guaranteed the debts.”

Howai said the last government did issue a guarantee, but First Citizens decided to confirm the guarantee.

“All we did was ask the minsiter to confirm that he knew about it and that it was fine,” Howai said. “It was signed-off by the previous government.” Dookeran said Government could not simply conduct a fire-sale to satisfy liabilities because several assets would take years to sell. “The suggestion made by many that we could sell all the assets of CL Financial and pay off debt is ludicrous–it would take three to five years,” he said.

He notes that the Government’s ongoing commitment to the bailout now stands at $19.9 billion.