The tale of three banks

Tue, Mar 6. 2012

Editor: We hear a lot of noise in the public domain about the effects of the global financial crisis and its attendant effects on small economies like ours in SVG, and already there is much speculation about how all of this will affect the financial services sector, particularly as we continue to “scratch our heads” for a sustainable resolution of the Clico/British American fiasco.{{more}}

Over the last week, I had the opportunity to better gauge the performances of our own financial services sector here in SVG, when three of our top Commercial Banks made what, in my opinion, are quite revealing public disclosures in the local media. On the one hand, two of these Banks – the First Caribbean International Bank (FCIB) and RBTT Bank – published their independent auditor’s reports for the last financial year ended 2011. In the other case, the Bank of St Vincent and the Grenadines was announcing the sale of Government shares to the NIS and staff of NCB.

Firstly, I noted with surprise the financial performances of the local branches of RBTT and FCIB/CIBC Banks with them recording losses of $282,000 and $381,000 respectively during the last financial year. The significance of these results cannot be slighted, since we are dealing with two large banks in terms of their international rankings. Furthermore, the Canadian ownership factor cannot be ignored, as Canadian banks are often touted as the standard bearers of sound banking practices internationally. So, what could have gone wrong? It is obvious that the international crises would have affected performance, but I would have expected these big banks with far more leverage and liquidity buffers than the local indigenous banks to have weathered the storm more successfully. The myth that “bigger is better” may have been debunked.

Secondly, while these banks are publicly declaring losses, I observe with a sense of great pride that our former National Commercial Bank, now Bank of St Vincent and the Grenadines, with its newly rebranded image, making a bold statement about selling shares to the public. In the context of the Bank of SVG offering shares to the public (IPO) some time this year, I look forward with greater anticipation to their 2011 results which should be published shortly. I hasten to suggest that their results must be positive if the IPO is still expected to be done this year. In fact, the IPO prospectus, which must be made available to all Vincentians, will also give us much needed insights into the prospects for the BOSVG over the coming years.

Lest we forget, it was the same NCB/BOSVG just two years ago that became the subject of much ridicule, when it had its own challenges and there were those who even championed its demise. What are they saying now? This must surely be a very proud moment for Vincentians and I cannot wait for the opportunity to purchase shares when they are offered for sale in a few months’ time. Let us all hope that we are right about BOSVG this time. Suffice it to say that the BOSVG must feel a great sense of vindication of its adoption of the new strategic direction taken two years ago. How quickly tables can turn! Look out for a continuation of “The Tale of Three Banks” or four banks, when another one of the international banks with a branch in SVG publishes its results as well.

Just in closing, it would not be idle speculation to conclude that had the results published in the newspapers of February 24, 2012 been those of BOSVG, there would have been much ‘hue and cry’ and public debate on the subject.

A Patriotic Observer