A decisive move is afoot for a major shareholder in neighbouring Trinidad & Tobago to take full charge of Republic Bank Grenada Limited (RBGL).
Republic Financial Holdings Limited (RFHL) has been given the go ahead by the Board of Directors of the bank to move in and purchase the shares of all the others who are mainly local people and organisations.
RFHL currently owns 51% of the shares in Republic Bank Grenada but is now seeking to acquire the remaining 49% which are currently owned mainly by Grenadians.
If successful, the move will give the Trinidad financial outfit complete control of the bank.
However, a group of local shareholders are moving to block the move by the Trinidadians.
These shareholders – some of the leading private sector executives in the country – are offering shareholders a bigger financial package offered by RFHL.
THE NEW TODAY understands that the offer from the Trinidad financial company has been approved by the Eastern Caribbean Central Bank (ECCB) and Eastern Caribbean Securities Regulatory Commission (ECSRC).
The offer is said to be $45 per share and its promoters are claiming that this will inject $33 million into the economy of Grenada and the OECS.
Senior Manager at ECFH Global Investment Solutions Limited, Medford Francis met with reporters at a press conference last week at the Radisson Grenada Beach Resort to explain what exactly is being offered by the Trinidadians.
“The offer price is $45 per share which in our opinion represents the fair value of the stock and represents a multiple of 20 times the current earnings of RGBL. It is also in line with the current market price stock.
“Many shareholders who were desirous of selling their shares but were unable to do so because of the absence of ready buyers on the ECSE and the transaction cost involved will see this as an opportunity.
Francis is confident that there will be tremendous multiplying effects once the offer is taken up by the other 49% shareholders.
“As the current shareholders accept the offer, they would be paid a cash consideration at the offer price of $45. Some persons will choose to save it within the banking system, some persons would invest it further in more tangible assets as well as security and some persons would use it for immediate consumption purposes e.g.: education needs, health needs, for repairs to their home and I am projecting that as they spend and as they save and as they invest there will be some multiplying effects”, he said.
“…Take for example if you do home renovations, you will employ a mason for two weeks or a month and so that person in turn will have a job that they didn’t have before. So $33 million in various forms will trickle down to various sectors of the economy and will have an impact,” he added.
Francis suggested that there is need for an external injection of capital into the banking system in Grenada since the IMF has projected negative growth in the Caribbean and Latin America for 2016 and into 2017.
“Republic Financial as part of the wider CARICOM family has demonstrated a commitment to increasing its capital in RGBL. We agree that this does not represent an increase in capital to RGBL but displaces the capital of existing shareholders”, he remarked.
“…However, the capital that will be displaced once the 49% shareholding in RBGL is acquired by Republic Financial will find its way into much needed indigenous banks to bolster their own capital so that they could in turn (i) continue administering loans and (ii) serving as a useful buffer against possible losses in the future particularly as economic recovery seems at times so elusive and fragile,” he said.
Like Francis, Executive Director at Republic Bank Limited, Derwin Howell, sees a number of positive investment spin-offs once the bank is turned over 100% to the Trinidadians.
He said: “A 100% shareholding will allow RFHL to make a greater investment in Republic Bank (Grenada). It will create economies of scale that will allow the Bank to move forward with investments in technology and human resources, so that we can provide an even better service to the Grenadian public.
“…With 100% ownership by RFHL, Republic Bank Grenada will be poised to achieve significant synergies and efficiencies. We will also be in a position to bring all of the resources to RFHL to banking Grenada,” he added.
Some of the small local shareholders have voiced support for the plan as put on the table by the local businessmen to prevent a total takeover of the bank by its majority shareholder from Port-of-Spain.
This newspaper was told that Centers have been set up at the different Republic Bank branches on the island to facilitate the move by RFHL to try and purchase the remainder of the 49% shares by Grenadians.
Shareholders have reportedly been given until today (Friday, June 10) to bring in their documents to sell their shares to the outfit from Trinidad & Tobago.