Ashford W. Meikle, Staff Reporter
Milton Brady, managing director of FirstCaribbean International Bank. - RICARDO MAKYN/STAFF PHOTOGRAPHER.
BY A unanimous decision minority shareholders of FirstCaribbean International Bank (Jamaica) Limited (FCIBJ) yesterday gave the board of directors the go-ahead to increase the bank's share capital.
At an extraordinary general meeting (EGM) yesterday, at the Courtleigh Hotel in New Kingston, shareholders were asked to vote on three resolutions:
Increase the authorised share capital from $100 million divided into 200 million ordinary stock units of fifty cents each to $150 million by the creation of an additional 100 million shares of fifty cents each.
Give the directors the authority to allot 85 million of the newly-created shares to FCIBJ's parent company, FirstCaribbean International Bank.
That the additional 100 million ordinary shares to be fully converted into stock units when issued and fully paid.
The new shares will have equal weighting with the company's current ordinary stock units.
The approval from the shareholders comes against a recent approval by the bank's board of a US$20 million ($1.3 billion) capital injection by FCIBJ's parent company which the former has argued is necessary for the bank to expand it's business in Jamaica.
The US$20 million capital injection formed part of a strategy designed to significantly increase the bank's current seven per cent market share of the banking sector over the next five years, wrote managing director of FirstCaribbean Jamaica, Milton Brady, in a January 4 letter to the minority shareholders.
INCREASE ITS STAKE
With the resolutions now passed, FirstCaribbean will increase its stake in FCIBJ to 96.21 per cent. Conversely, the minority shareholders' stake will be reduced to 3.79 per cent from the 5.20 they held previously.
Perhaps cognisant of the failed 2003 bid by FirstCaribbean International to buy out minority shareholders, Brady, in his letter, emphasised that "None of our approximately 1,200 minority shareholders will be prejudiced by the capital injection being made by the parent company."
Chairman of the bank, Michael Mansoor, declined to answer whether this increased shareholding was a prelude to renewed attempts by FirstCaribbean International to launch another bid to buy out minority shareholders. Apart from pointing out that the matter was inappropriate for the meeting, he insisted that it was more important to look at what the bank is doing rather than try to predict the future.
Brady told the minority shareholders that the bank had not gone the route of a rights issue because of the expenses involved - as high as two per cent of the capital raised, or roughly about $26 million. Furthermore, he explained, even if there was a rights issue the bank would only raise $68.8 million if all the minority shareholders were to accept the 3.8 million new shares issued.
With the resolutions now adopted, it means that the bank can now concentrate on its expansion plans.
In a presentation at the EGM, Brady outlined the bank's expansion plans, which include opening three additional branches in Liguanea, Savanna-la-Mar and Portmore. Additionally, the bank would install 12 more automated teller machines (ATMs) across the island.
It will also be seeking to aggressively grow its loan portfolio, especially in hard currency. "We need to lend more in hard currency but you can't lend money if you don't have the capital," Brady said. In fact, as part of this new thrust, the bank recently launched its international mortgage product.
NOTICE
Brady gave notice that the bank would be aggressively targeting well-off individuals for its capital markets division.
The managing director estimates that with the new capital injection the bank should be able to triple its earnings by 2009.
But, underlying all of this, is the bank's intention to build its image in Jamaica.
"We haven't really defined ourselves in the Jamaican market in the past," noted Brady. "The FirstCaribbean brand needs to be sharpened."
