Canadian bank CIBC announced in a press release on Friday that a majority stake in its Caribbean arm, CIBC FirstCaribbean International Bank Limited, has been acquired by GNB Financial Group Limited.
GNB reached an agreement with CIBC to purchase 66.73 percent of CIBC FirstCaribbean’s shares, a transaction which is still subject to regulatory approval from local regulators, the release noted, adding that CIBC will continue to hold 24.9 percent stake of its Caribbean arm.
Chief Executive Officer of CIBC FirstCaribbean Colette Delaney said in the release that the bank remains a strong financial entity.
“CIBC FirstCaribbean is a strong, well-performing business that continues to grow across the region,” Delaney said.
“It remains laser-focused on delivering on its strategy – providing its clients with first-class service through a modern, everyday banking experience and providing its employees with the best possible work experience.”
Rumors spread like wildfire last week about the possibility that GNB’s Colombian owner Jaime Gilinski Bacal was eyeing the purchase of CIBC FirstCaribbean.
Bacal said in Friday’s release that his company intends on keeping CIBC FirstCaribbean the strong financial institution it is today.
“I have been impressed by the strength and stability of CIBC FirstCaribbean and am excited about its prospects for the future,” Bacal said.
According to the release, GNB is wholly owned by Starmites Corporation S.ar.L, the financial holding company of the Gilinski Group.
“The Gilinski Group has banking operations in Colombia, Peru, Paraguay, Panama and the Cayman Islands with approximately US$15 billion in combined assets,” the release noted.
Last year Guardian Business reported that CIBC reversed its decision to list its Caribbean operations – valued at $2 billion – on the U.S. stock market due to market conditions.
A Reuters article published in December 2017 explained CIBC’s proposed move was a result of earnings growth in the Caribbean being slow and the bank no longer considering the Caribbean a core asset.
CIBC, via its Caribbean subsidiary, has been one of the three big Canadian commercial banks operating in The Bahamas. Over the past two years, those commercial banks have been scaling back their businesses to compete in the difficult Bahamian economy.
Bad loans and high operating costs have caused the banks to close branches and decrease their workforce over the years. The financial crisis of 2008 was a catalyst for the extreme rightsizing actions of Canadian banks in the region.
The Reuters article added: “Tough economic conditions in Barbados are hampering CIBC FirstCaribbean’s potential for growth while executives are mindful of perceived regulatory risks associated with the region.”