Insurance powerhouse Colonial Life (Clico) has taken controlling interest of banking giant Republic Bank Ltd.
By Curtis RampersadIn a transaction worth TT$737 million (US$117 million), FirstCaribbean International Bank Ltd (FCIB) announced in Barbados yesterday that it had "conveyed its interest" of more than 14 million Republic Bank shares at the end of first quarter 2005.
But ending days of speculation, FCIB confirmed that the sale of 14,025,730 Republic shares had passed to Clico Investment Bank, a subsidiary of Port of Spain-based, Lawrence Duprey-led Clico insurance company.
The almost ten per cent Republic Bank stake brings Clico's investment in the bank to almost 53 per cent, effectively boosting its claim as the bank's largest single shareholder and giving it controlling interest in the billion-dollar commercial institution.
It gives rise to renewed speculation about what Clico-which almost muscled its way toward taking over Republic in 1996-intends to do with its increased hold of Republic, one of the Caribbean's most successful banking groups and the most expensive of the blue chip stocks trading on the local stock market.
Clico acquired the shares in the banking group by virtue of Clico Investment Bank's acquisition of 100 per cent interest in First Company Ltd, a St Lucian company and a FirstCaribbean wholly-owned subsidiary in which the shares were sold.
Executive chairman of FCIB Michael Mansoor said yesterday: "We took the decision to convey these assets at this time because we wanted to take advantage of the favourable share price."
He said the investment in Republic was made more than seven years ago for strategic purposes that did not obtain in current circumstances.
"We anticipate using the proceeds of this sale to fund our capital objectives," Mansoor said.
Republic's chairman Ronald Harford was not immediately worried that the investment would impact on the bank's operations.
"Clico has had significant shareholding in the bank for a long time that could have enabled it to interfere," he said. "But they have upheld the legal agreement to not interfere in the bank's operations."
He said he did not believe that Clico would now interfere or that the bank's operations and performance would be impacted.
But he admitted that he did not know what Clico's intended to make of its increased shareholding in the bank.
After six weeks of bitter corporate wrangling, Republic Bank and Clico brokered a deal and signed a Valentine's Day peace agreement in 1997 which ensured peace for ten years and freedom from attempts by Clico to take over the bank during that period.
Back then, Duprey-who could not immediately be reached yesterday-described Republic as Clico's single most important asset and said it heralded a new beginning between the two financial institutions.
But financial experts speaking on condition of anonymity speculated that Clico could be looking to sell part of, or its entire investment, thereby giving Duprey's privately held company a profit of billions of dollars.
The new deal for Clico comes on the heels of Republic Bank declaring a an aftertax profit for its financial year of more than $710 million.
