De-Risking In Jeopardy 4

• Published date: 24 March 2021
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Government, Public Sector, Financial Services, Corporate and Company Law, Contracts and Commercial Law, Money Laundering, Securities
• Law Firm: Information Management Solutions Limited
• Author: Mr Ian Moncrief-Scott

De-Risking in Jeopardy 3 concluded at the stage when the Canadian Imperial Bank of Commerce (CIBC) had reached an agreement with the Gilinski Group, Colombia, to purchase FirstCaribbean International Bank Limited for US $797 million.

At the time, eyebrows were raised, but because of the involvement of CIBC, proceedings developed and optimism of a successful outcome of the transaction was presumed.

Long-standing observers of banking and financial matters in the region did not share the view and many were alarmed.

That was 2019 and, whilst it is not unusual for sales or amalgamations of major entities to take several years to reach a conclusion, it is especially surprising that those involving banks should end in failure.

Nevertheless, early in 2021, CIBC disclosed that the proposed sale of the majority of FirstCaribbean International Bank's ownership to GNB Financial Group has fallen through.

The reason for this change in plans has been given as lack of support by the region's regulators.

Spawned in 2002, FirstCaribbean International Bank Limited is a relatively new bank by international banking standards.

It was born of arrangements between Barclays Bank PLC and Canadian Imperial Bank of Commerce, both of which were very long-standing institutions operating in the Caribbean.

It took several years of preparation for the banking clients of both Barclays and CIBC to be transferred to a single entity, known as CIBC Caribbean Limited and then broken off into the first appearance of FirstCaribbean International Bank Limited.

However, by 2006, Barclays decided to withdraw entirely from its Caribbean risks and CIBC became the sole owner of the FirstCaribbean International Bank Limited, despite the Caribbean being internationally recognised as a high-risk environment.

In 2011, CIBC announced that it was joint branding with FirstCaribbean International Bank Limited.

2018 saw CIBC deciding to try to mitigate its risks with an Initial Public Offering (IPO) in the United States for FirstCaribbean International Bank Limited.

The attempt was unsuccessful and CIBC had to withdraw its Proposal.

Nevertheless, the Prospectus registered with the Securities and Exchange Commission distanced CIBC from FirstCaribbean International Bank Limited by stressing that it was an indirect owner of the Caribbean-managed operation, while at the same time confirming that First Caribbean International Bank (Barbados) Limited was a subsidiary of First Caribbean International Bank Limited.

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