Hav­ing failed to ac­quire Sco­tia­bank’s as­sets in Guyana, state-owned First Cit­i­zens now says it is open to ap­ply­ing for bank­ing li­cens­es in both Guyana and Ja­maica and open­ing brick and mor­tar banks there, as it tries to grow be­yond T&T.

The bank’s chief ex­ec­u­tive of­fi­cer Karen Dar­basie held a pre­sen­ta­tion on Thurs­day for the busi­ness ed­i­tors of the three dai­ly news­pa­pers in which she made the dis­clo­sure.

She was asked specif­i­cal­ly if First Cit­i­zens was pre­pared to ap­ply for a li­cense and start from scratch a new bank in those coun­tries .

Dar­basie said, “Am I open to start­ing op­er­a­tions, ap­ply­ing for a li­cense to build from scratch, and do both ? Yes! Am I open to do that across the ju­ris­dic­tions ? Yes!”

She added, “What I can say cat­e­gor­i­cal­ly is that we are in­ter­est­ed in di­ver­si­fi­ca­tion from the group per­spec­tive, prod­uct, cus­tomer and ge­og­ra­phy.”

First Cit­i­zens’ CEO said while the bank was dis­ap­point­ed in not be­ing able to con­sum­mate the Sco­tia­bank Guyana deal, it was still very in­ter­est­ed in the South Amer­i­can coun­try.

“We are still in­ter­est­ed in Guyana, we are in­ter­est­ed in lend­ing to en­ti­ties and projects in Guyana, we will do that… on­ly with the req­ui­site reg­u­la­to­ry ap­provals from the bank of Guyana, and we con­tin­ue to try to ex­plore op­por­tu­ni­ties in Guyana.” Dar­basie told the brief­ing.

She said First Cit­i­zens has cus­tomers from T&T who are en­gag­ing in projects in Guyana and would like to sup­port its cus­tomers from T&T in their busi­ness op­por­tu­ni­ties.

Dar­basie said the fail­ure to ex­tend to pur­chase agree­ment was based on the fact that there was no clear way for­ward and de­nied ever be­ing told by the Guyana gov­ern­ment or the Bank of Guyana that the trans­ac­tion would not be ap­proved.

“I think when the Sco­tia trans­ac­tion came to an end we did put out a Q and A that stat­ed we are in­ter­est­ed in lend­ing across the re­gion, lend­ing sub­ject to reg­u­la­to­ry ap­provals from T&T, we are still in­ter­est­ed in lend­ing to en­ti­ties or projects in Guyana and we are in­ter­est­ed in north­ern Caribbean as well. So we are in­ter­est­ed...We are look­ing at what op­por­tu­ni­ties de­vel­op and based on what de­vel­ops and if it makes sense we will progress it.”

She added, “When you en­ter in­to agree­ments such as these to pur­chase, these agree­ments nor­mal­ly have an ex­pi­ra­tion date, be­cause they are en­tered in­to at a point in time with a price and it’s a clear­ly de­fined pe­ri­od.

“To be hon­est, COVID hap­pened, no­body re­al­ly thought COVID would have tak­en so long and the process stretched out and the agree­ment came to an end, it was nev­er de­clined, the agree­ment came to an end be­fore and con­sum­ma­tion could hap­pen.”

Dar­basie was asked if the threat of Fin­tec meant that the best ap­proach to mov­ing in­to Ja­maica or Guyana was a dig­i­tal first ap­proach, she said if it hap­pens it would be a com­bi­na­tion of both dig­i­tal and brick and mor­tar. Promis­ing to keep us up­dat­ed if there were any an­nounce­ments to be made.

“In T&T we are de­ploy­ing brick and mor­tar in con­junc­tion with a dig­i­tal strat­e­gy. So we are main­tain­ing our branch foot­print and we are in­vest­ing in new prod­ucts and ser­vices and tech­nol­o­gy to re­al­ly ex­pand our dig­i­tal prod­uct of­fer­ings.

“So we do­ing both in T&T. My per­son­al view is that you need a brick and mor­tar pres­ence in our state of de­vel­op­ment, where we are in the re­gion, that it would be very dif­fi­cult to have a full fi­nan­cial ser­vices group, which is what our am­bi­tion is with­out some de­gree of brick an mor­tar in that mod­el.

“Per­cent­age brick and mor­tar vs dig­i­tal will vary ac­cord­ing to the state of de­vel­op­ment of the coun­try.” Dar­basie ex­plained.

On the is­sue of First Cit­i­zens fu­ture out­look and whether it is hold­ing a lot of gov­ern­ment debt as a state en­ter­prise, Dar­basie ac­cept­ed that the bank had more gov­ern­ment pa­per than its com­peti­tors but said it was on­ly 35 per cent of the to­tal bal­ance sheet.

She ar­gued, “Am I con­cerned in the cur­rent en­vi­ron­ment? Not re­al­ly con­cerned in the cur­rent en­vi­ron­ment, be­cause T&T is per­form­ing bet­ter in the cur­rent en­vi­ron­ment be­cause a lot of the neg­a­tives that are im­pact­ing across the board is ac­tu­al­ly ben­e­fit­ing us from an en­er­gy price and tax­es etc , un­like some coun­tries.”

She not­ed that a sig­nif­i­cant part of the First Cit­i­zens bal­ance sheet is ac­tu­al­ly in in­vest­ment with more of the bal­ance sheet in in­vest­ment as op­posed to loans.

Asked about the ex­pe­ri­ence from tak­ing a hit on sov­er­eign pa­per from Bar­ba­dos.

Se said, “We took the hit from the Bar­ba­dos re­struc­tur­ing on the chin. We didn’t have a choice, they re­struc­tured, be­cause the size of our op­er­a­tions in Bar­ba­dos is so small, any hit is a ma­te­r­i­al hit, but it was not a ma­te­r­i­al hit that caused an is­sue with our earn­ings po­ten­tial in that year.”

She was asked if in be­ing ex­posed to the Bar­ba­dos sit­u­a­tion has chas­tened the bank’s ap­proach to lend­ing to gov­ern­ments she said, “ My phi­los­o­phy on any as­set is to look at the cred­it risk of the as­set, rel­a­tive to the re­turn of the as­set. So any­thing that we do, whether it is a loan, or an in­vest­ment, whether it is a pri­vate sec­tor or a sov­er­eign we look at the risk re­ward ra­tio.”

On the is­sue of in­vest­ing Dar­basie de­fend­ed the Bari­ta share pur­chase say­ing it was a good in­vest­ment that had made the bank and its share­hold­ers’ mon­ey.

“Bari­ta was an in­vest­ment that was done be­cause we saw a busi­ness op­por­tu­ni­ty. In ear­ly 2019 there was a Bloomberg ar­ti­cle that said Ja­maica was the best per­form­ing stock ex­change in the world for 2018, even in that ar­ti­cle Bari­ta was iden­ti­fied as an en­ti­ty that was one of the top per­form­ing stocks, we saw a busi­ness op­por­tu­ni­ty that we made in FCIS.

“The on­ly col­lab­o­ra­tion be­tween us and Bari­ta has been the Massy cross list­ing where we worked to­geth­er with Bari­ta on Massy. Oth­er than that we are a very small share­hold­er in Bari­ta.”

Dar­basie said First Cit­i­zens re­mained a great op­por­tu­ni­ty for in­vestors, she said div­i­dends re­mains steady, the loan delin­quen­cy ra­tio was low, it is well cap­i­talised for growth and has shown con­stant growth in its bal­ance sheet and cap­i­tal ap­pre­ci­a­tion for in­vestors.