The Barclaysand CIBC Merger - The Official Story
CIBC's ChrisRichmond, Head of Caribbean Region Global Private Banking andTrust (left) with
Tom Crawford, Vice President, Commercial and Retail Banking inGrand Cayman
Ending months of speculation in Cayman andthe wider Caribbean along with constant refusals to comment bymanagement, Barclays Bank and CIBC announced Monday, 23 July thatthey are planning a merger of their regional businesses into onefinancial house, First Caribbean International Bank.
This information comes on the same day ofstaff meetings in all the Caribbean territories where these bankshave branches, but there has been little indication to the workerson how much they will be affected by the pending merger.
"Barclays and CIBC announce that theyare in advanced discussions which are intended to lead to thecombination of their retail, corporate and offshore banking operationsin the Caribbean to create FirstCaribbean International Bank.Implementation of the combination would be subject to requiredapprovals from government and regulatory authorities," ajoint release from the banks said.
"This is a highly exciting opportunityfor the Caribbean on the whole and Cayman in particular,"a CIBC executive told Cayman Net News.
The release said that First Caribbean InternationalBank would bring together two complementary and leading financialservices businesses in the Caribbean, offering customers enhancedproducts, improved services and extended access to banking services.It would establish FirstCaribbean International Bank as a significantCaribbean presence and enable it to play a key role in the region.
Reports out of Barbados are that headquartersof the new entity will be established there and a company withthat name has been registered in theisland.
Barclay's Bank'sGraeme Skinner, Head of Corporate Banking and Senior Caman IslandManager (left)
and Perer S. Hinson, Director, Offshore Banking Caribbean andBahamas Region
"Under the structure of the proposedtransaction, it is intended that Barclays and CIBC would eachown approximately 45 per cent of the ordinary share capital ofFirstCaribbean International Bank, with the remainder held publicly.It is the intention of CIBC and Barclays to increase the publicshare holdings of FirstCaribbean International Bank beyond theinitial 10 per cent to up to 20 per cent as soon as practicable.FirstCaribbean International Bank would retain the listings ofCIBC West Indies Holdings Limited in Barbados, Trinidad and Tobagoand Jamaica.," the release read.
Michael Mansoor, President and CEO of CIBCWest Indies Holdings Ltd, said "Our goal would be to establishFirst Caribbean as a market leader in service, products, easeof access and innovation. With a combined history of 225 yearsof experience in the region we have a clear understanding of thebusiness and consumer needs in this diverse group of nations.This will be a bank of the Caribbean, for the Caribbean, withconnections to the world."
Charles Middleton, Barclays Regional Directorof the Caribbean and Bahamas said, "We intend First Caribbeanto be one of the leading banks in the Caribbean. Its size anddiversity should provide our staff with a wide range of careeropportunities. It is also the intention to offer staff a sharepurchase plan that will allow them to participate in the futuregrowth of the company."
According to the released information BarclaysPrivate Banking and CIBC Wealth Management businesses and theirclients are not included in the scope of the discussions and wouldremain under their respective Barclays and CIBC ownership.
Barclays and CIBC expressed a belief that this combination wouldprovide benefits and opportunities for customers, staff and thebusinesses above those which could be achieved by either operationon a standalone basis.
While emergence of this mega bank couldpresent exciting prospects on the business front and despite theannounced opportunities for staff, workers might have reason toworry because in the same way that unofficial information aboutthe merger swirled through the Caribbean, there is now speculationthat as many of 800 employees could be cut from the workforce.
News reports in Barbados speak of weekendmeetings with some of the banks' managers who were told that ayet to be revealed number of them are to be offered severancepackages. At Monday's meeting staff were reportedly told thatthere will be some attrition as certain positions will be maderedundant and other jobs will be created. But management stressedthat those decisions were not yet made as progression of the mergeris far away from that point.
Meanwhile, a fallout from this merger talkis a clamouring by the Antigua Commercial Bank and the Antigua/BarbudaInvestment Bank for first option of the local Barclays operationif there is to be any buyout.
Additionally, that country's Prime MinisterLester Bird was quoted in the media there saying that in sucha merger he would like to see other international banks enteringthe country.
"you don't want the banking situationto be tied up in the hands of just a few persons and mergers,then to become de facto monopolistic. From that standpoint onehas to be concerned. "the fact that Barclays is now subsumedinto CIBC, is on one hand a good thing, but on the other hand, we have to make sure that we keep Antigua and Barbuda open tothe international capabilities. It would be a good thing if wehave another bank coming in like a Chase Manhattan of Bank ofAmerica to counter-balance it," he said.