Ashford W. Meikle, Staff Reporter
General manager of FirstCaribbean International Building Society, Lenworth Tracey, (right) engages partner of Myers, Fletcher and Gordon, Ethan Sinclair, in conversation during the building society's launch of its international hard currency mortgage product at the Knutsford Court Hotel on January 25. - RUDOLPH BROWN/CHIEF PHOTOGRAPHER
FIRSTCARIBBEAN International Bank (FCIB) has deepened its shareholding in its Jamaican subsidiary with the supplemental listing, according to the Jamaica Stock Exchange website, of 72 million ordinary shares. The shares will be allotted to the regional banking conglomerate, managing director of FirstCarib-bean International Bank Jamaica Limited (FCIBJ), Milton Brady confirmed to Financial Gleaner.
"It's for those shares which are to be issued to the parent company in exchange for the $1.3 billion capital injection which we got in March," Brady said. "If, for example, you look at our second quarter results our capital base was increased substantially."
Last February, at an extraordinary general meeting (EGM), minority shareholders of FCIBJ gave the board the go-ahead to increase the bank's share capital by the creation of an additional 100 million pari passu share of which 85 million would be allotted to its parent company.
Prior to EGM the bank had announced, in a letter to shareholders, that FirstCaribbean International Bank would inject US$20 million ($1.3 billion) into the Jamaican company to support the latter's expansion plans, particularly as it was about to launch its international mortgage product. The bank's management had argued at the time, that a rights issue would be impractical and inadequate. "If we did a rights issue we would have raised, in the best of circumstances, somewhere in the region of $50 million in additional capital from the minority shareholders and the cost of the rights issue would be somewhere in the region of $15 million. So, when we look at it, from a cost benefit approach, it would not make sense," Brady told Financial Gleaner.
SHAREHOLDERS REDUCED
With the creation of the additional 100 million shares, the bank's parent company increased its shareholding to 96.21 per cent, while the stakeholding of the 1,200 minority shareholders was reduced to 3.79 per cent from the 5.20 they previously held. At the time of the announcement of EGM, Brady, perhaps cognisant of the failed 2003 bid by FirstCaribbean International to buy out minority shareholders emphasised that "none of our approximately 1,200 minority shareholders will be prejudiced by the capital injection being made by the parent company."
The FCIBJ boss emphasised, "Clearly the capital injection of $1.3 billion was a vote of confidence. I don't think there are many financial institutions that have increased their capital base through a fresh injection of capital recently."
