Judging FCB

First Citizens Bank Limited (FCB) has over the years shrugged off the little kid on the block image it had when it was formed out of the merger of three banks — National Commercial Bank, Workers’ Bank and the Trinidad Cooperative Bank — to become the third largest bank operating in Trinidad and Tobago. When FCB emerged, Republic Bank, the then Royal Bank of Trinidad and Tobago (now RBTT) and Scotiabank each enjoyed a not insubstantial share of the customer deposit market, with FCB having a great deal of catching up to do.  Last week, an understandably pleased, Larry Howai, Chief Executive Officer of FCB, announced that it had surpassed Scotiabank in terms of assets and was now the third largest bank in the country.

In the last financial year FCB’s pre-tax profits jumped by an enviable 34%, rising to $300 million, up from last year’s figure of $233 million.  Rising customer confidence in FCB has seen deposits rising to $3.7 billion, up by some $200 million over the previous year’s figure of $3.5 billion. There have been several additional positives achieved over the last financial year: FCB’s group assets, which pushed it to third place, are today $8.4 billion, with a further $5.2 billion in funds under management through pension funds, trust accounts and mutual funds.  But the bank’s success story does not end there and FCB’s net loan base has grown impressively from $2.3 billion to $3.1 billion, and as the CEO pointed out its non-performing loans as a ratio of total group loans stand today at 1.83%, “one of the lowest in the local commercial banking industry.”

But while all of the above add up to a tremendous plus and achievement for FCB, a State enterprise, Government should consider seriously controlled divestment. At the same time, take steps to ensure that FCB does not fall under foreign ownership.  It can do this both by limiting the value of shareholding that any single individual or group can acquire, arranging to sell 20% of the shareholding to the Trinidad and Tobago Unit Trust Corporation and have 10% as part of the portfolio of National Enterprises Limited, while initially retaining 21%.

Special consideration should be given to setting aside a percentage of the shares to credit unions and pension funds. Although, in essence Government would hold a minority of the shareholding, nonetheless the interests of the taxpayer and citizens, generally, would be protected. Later, it can divest yet further. In turn, under a carefully planned divestment of FCB, no single person or group or company at any given time should be permitted to purchase more than a worked out given number of shares.  Such a system would not prevent individuals, groups, companies from acquiring further shares that have already been sold, but the initial thrust would provide as many citizens as possible with the opportunity to become investors.