CONTROLLED AGGRESSION

RBTT Group CEO Jerome Sooklal has put the bank on an acquisition mode and he is prepared to bring in new blood and big guns to meet his objectives. For now, he said, hostile takeovers are out of the equation. By showing his hand, Sooklal has raised the heat in the banking sector a notch. “We want to become the region’s  leading financial provider in three years,” he said matter-of-factly. He was outlining the bank’s vision at his first press briefing at RBTT’s executive offices on Park Street on Tuesday. Sitting with him were RBTT Chief Operating Officer Suresh Sookoo and RBTT Merchant Bank Managing Director Lyndon Guiseppi Sooklal  said there are attractive opportunities in the Caribbean and Central America and the bank has hired Nigel Romano, a top gun at Citibank in Singapore, to lead its acquisition and mergers charge.

RBTT is also bringing on board Credit Suisse First Boston to guide its acquisition strategy. As for the Dominican Republic, “We are open,” he said. But Sooklal has his eyes set on Central America; the bank will soon set up a merchant bank subsidiary in Costa Rica. “It’s easier to deal with Central America first,” he said, noting that South America was a very competitive market. “We are taking it one step at a time,” he said. “You have to pick which markets you enter.” To fine-tune its acquisition strategy, RBTT will be raising a $100m bond issue and bringing it to the market soon. “It will be used to clean up inter-company lending and fund acquisitions in the future,” said Guiseppi, noting that while the issue had not been priced as yet, it would have a maturity between seven-ten years. The bond has been registered with the US Securities Exchange Commission (SEC).

Most of it would be placed regionally, Guiseppi said, noting that some would be issued to qualified US investors. “The company has a good history of  acquisitions,” Sooklal told reporters, noting that the Dutch Caribbean was a good opportunity to increase market share. In Jamaica, with the economy improving, Sooklal thinks it has a good fit for their consumer and corporate banking arms. “From our own experience, it was rare to have acquisitons with all turning out quite well,” Sookal said. “It’s just the RBTT way of doing things,” he said. “It has a lot to do with the strength of the brand,” Sookoo added Would RBTT be interested in  First Citizens Bank? “Why? Is FCB for sale? Sooklal asked. If it comes on the chopping block, RBTT, would have to look at all its options, he said.  

Asked if he was looking at acquisitions in TT, “I would say yes” he said. But whether Central Bank would allow RBTT to increase local market share was another issue and talked about breaching anti-thrust and monopoly laws when these are brought on stream. He said right now RBTT wanted to attain  efficiencies from past acquisitions. “It is time to get benefits of economies of scale,” he said, stressing that part of this was saving costs. On whether hostile takeovers were on the cards, Sooklal dismissed this, saying, “In this type of environment, hostile takeovers don’t work. “You approach them, and if they want to dance with you, they will dance. If they don’t want to, then they won’t,” he said.   Sooklal said what he wanted was to use the talent from completed acquisitions and make aggressive international recruiting part of RBTT’s overall strategy.

Asked whether he was getting bang for buck from RBTT’s acquisitions, Sooklal said while he was not unhappy with them, “You should be able to gain efficiencies and achieve economies of scale.” In the last quarter of 2004, the company showed a profit of $803m, when compared to the $576m in 2003. He also spoke about RBTT’s $5.2 billion in cash reserves, of which $1.6b was in statutory deposits. “It is not excess cash.” he said of the reserves.  “I wish I had $5b to play with but I don’t,” he said.  He noted though that some of this will go towards funding acquisitions. In simple terms and using a slide, he showed RBTT’s organisational structure and where other business units stood in the organisation. He made it clear that the role of group chairman, Peter July and his own as group CEO were distinct and separate.

He described July as a mentor and a store house of knowledge. Sookoo, he said, would have the responsibility for developing and implementing business plans and for increasing market share. Sooklal is clear though as to what he wants to do : expand in countries where RBTT already has a presence and to put the bank on an acquisition footing. Asked about FCIB’s acquisition of Mercantile and JMMB adding Intercommercial to its balance sheet, Sookoo said neither bank was offered to them. Even so, they did not bring much as far as market share was concerned. Sooklal’s tenor changed when he spoke  about Republic Bank being the number one commercial bank in TT. “That won’t be for long,” he said. “There is more to come as to what we can do to become number one,” he said. Sookoo added that there might be a 10% market share difference as far as retail banking goes but it all depends on how you look at it.   

On RBTT’s involvement in the energy sector, he said it was difficult for local banks to get into this sector because of the capital requirements and therefore much easier for the foreign banks. He said RBTT and GHL were coming up with new ways to fund energy. “We’d love to be upstream,” he said, “but that is difficult.” Still, he said they were exploring all their options. “We can’t think of local banks funding energy projects,” said Sookoo, noting that “we have to come up with other means to do so.” He feels strongly about meeting the needs of customers and would like to get staff closer to them. RBTT plans to invest $200m to improve integration among its business units as well as raise the level of service it provides to external and internal customers.