First Cit­i­zens chief ex­ec­u­tive of­fi­cer, Karen Dar­basie, says the ma­jor­i­ty state-owned bank is in­ter­est­ed in di­ver­si­fy­ing its as­set base and its rev­enue streams.

“We’re in­ter­est­ed in di­ver­si­fi­ca­tion of cus­tomer, prod­uct, and ge­og­ra­phy,” she said in an in­ter­view with the Busi­ness Guardian at the Queen’s Park East head of­fice of the bank last Thurs­day.

Apart from T&T, First Cit­i­zens has op­er­a­tions in Bar­ba­dos, St Lu­cia and St Vin­cent in the East­ern Caribbean. The St Lu­cia and St Vin­cent op­er­a­tions are sub­sidiaries of First Cit­i­zens In­vest­ment Ser­vices (FCIS), the in­vest­ment and wealth man­age­ment arm of the group. First Cit­i­zens al­so has an op­er­a­tion in Cos­ta Ri­ca, which par­tic­i­pates in loans that have been orig­i­nat­ed by mul­ti­lat­er­al lend­ing agen­cies for cus­tomers in Latin Amer­i­ca.

Dar­basie said T&T ac­count­ed for rough­ly 85 per cent of the bank’s bal­ance sheet as at the end of Sep­tem­ber 2020, but that dropped to 80 per cent at the end of its 2022 fi­nan­cial year end.

“Our re­gion­al di­ver­si­fi­ca­tion, even though it’s based on or­gan­ic growth, has re­sult­ed just over that short pe­ri­od, in that shift to a big­ger con­tri­bu­tion of the re­gion­al as­set base to the group’s as­sets. It’s trend­ing in a sim­i­lar di­rec­tion this year. Once we pub­lish, we’ll be able to give you the specifics on that. But the trend has con­tin­ued, that much I can tell you, as our re­gion­al as­sets are con­tribut­ing a greater and greater per­cent­age,” said the First Cit­i­zens CEO.

She not­ed that the Port-of-Spain-based cor­po­rate bank­ing team cov­ers the en­tire Caribbean, sup­port­ing its T&T-based cus­tomers who op­er­ate through­out the re­gion, by lend­ing mon­ey to their en­ti­ties out­side of T&T.

Asked about the FCIS ac­qui­si­tion of shares in Bari­ta In­vest­ments Ltd, Dar­basie said the in­vest­ment in the pub­licly list­ed in­vest­ment com­pa­ny in Ja­maica is part of the group’s port­fo­lio of ex­ter­nal as­sets and “is a fair­ly small in­vest­ment from a share­hold­ing per­spec­tive.”

FCIS owned 90,795,154 shares in Bari­ta In­vest­ments Ltd, as at June 30, 2023, mak­ing the T&T com­pa­ny the sec­ond largest share­hold­er of the Ja­maican firm with 7.44 per cent. As at Sep­tem­ber 30, 2022, the FCIS in­vest­ment in Bari­ta was worth $430 mil­lion.

“The in­vest­ment in Bari­ta was an op­por­tu­ni­ty to get cap­i­tal gains and a div­i­dend flow in a Ja­maican econ­o­my that was do­ing pret­ty well,” she said.

Asked whether the in­vest­ment in Bari­ta has been suc­cess­ful, she said: “We still have a net cap­i­tal gain on the po­si­tion, even though the share price has come down...and we have re­ceived div­i­dends in US dol­lars.”

Ques­tioned on whether First Cit­i­zens has plans to have a phys­i­cal pres­ence in Ja­maica, Dar­basie said: “No im­me­di­ate plans to have a phys­i­cal pres­ence. And im­me­di­ate­ly could change. Any di­ver­si­fi­ca­tion of a bank in­to an­oth­er coun­try is sub­ject to reg­u­la­to­ry ap­proval. Banks are the most reg­u­lat­ed en­ti­ties prob­a­bly in many ju­ris­dic­tions. And that, of course, re­quires reg­u­la­to­ry ap­proval in your home coun­try as well as any coun­try you’re go­ing to.

“At this point in time, we have no plans for a phys­i­cal pres­ence in Ja­maica, but we are open to con­sid­er­ing op­por­tu­ni­ties as they may arise.”

Dar­basie said First Cit­i­zens is in a growth mode that aligns with the bank’s strat­e­gy and risk ap­petite.

On the is­sue of whether the bank is in an ac­qui­si­tion mode, she said: “I would say First Cit­i­zens is open to con­sid­er­ing ac­qui­si­tions that must yield ac­cre­tive, pos­i­tive re­turns for our share­hold­ers...all of them. This is a slight­ly dif­fer­ent way to po­si­tion it than to say we are in an ac­qui­si­tion mode.”

She said the First Cit­i­zens bal­ance sheet does al­low for con­sid­er­a­tion of ac­qui­si­tions.

“My cap­i­tal ad­e­qua­cy ra­tio is very good,” the bank­ing ex­ec­u­tive said, adding, “In fact, if you look at my last Stan­dard and Poor’s rat­ing, I do ben­e­fit from an up­lift in my read­ing due to the strength of cap­i­tal. So from a cap­i­tal per­spec­tive, the bal­ance sheet does al­low for con­sid­er­a­tion of ac­qui­si­tions.

“But the bal­ance sheet is not the on­ly con­sid­er­a­tion when you’re look­ing at an ac­qui­si­tion...When you’re look­ing at ac­qui­si­tions, you al­so have to con­sid­er not just the tar­get and the strength of your bal­ance sheet, but the glob­al en­vi­ron­ment, which is par­tic­u­lar­ly volatile at this point in time.”

Dar­basie not­ed that US in­ter­est rates at their high­est lev­els for many years, which makes the fund­ing of ac­qui­si­tions now more ex­pen­sive...and most ac­qui­si­tions re­quire fund­ing.

Asked whether First Cit­i­zens would be look­ing to make ac­qui­si­tions as a re­sult of the re­duc­tion of the foot­print of the Cana­di­an banks in the Caribbean, Dar­basie said the T&T bank would look at all op­por­tu­ni­ties as they are pre­sent­ed--from a bal­ance sheet per­spec­tive, the size of the po­ten­tial tar­get and whether ex­ter­nal fund­ing is re­quired.

“But I would be very hes­i­tant to bor­row in this cur­rent en­vi­ron­ment in the in­ter­na­tion­al mar­ket, be­cause I don’t want to be pay­ing (these high) in­ter­est rates for the next five years.”

She said the over­rid­ing and fun­da­men­tal con­sid­er­a­tion in mak­ing an ac­qui­si­tion is whether it cre­ates val­ue for the share­hold­ers of the bank.

“If it does not cre­ate val­ue for our share­hold­ers, maybe not in the first year but in the short term, then it’s some­thing that we will re­al­ly have to think very long about the fun­da­men­tal rea­son for an ac­qui­si­tion as part of our ge­o­graph­ic di­ver­si­fi­ca­tion. Be­cause what we’ve been do­ing so far is di­ver­si­fi­ca­tion from or­gan­ic growth.

“And as you can see, it has been en­gen­der­ing a pos­i­tive re­turn for our share­hold­ers. Pos­i­tive but not spec­tac­u­lar, but not neg­a­tive.”

On the is­sue of the per­for­mance of the First Cit­i­zens stock on the T&T Stock Ex­change, Dar­basie not­ed that for cal­en­dar 2023, the bank’s share price has trad­ed in a tight range of around $50.

“And for this fi­nan­cial year, up to the nine-month point, I paid a div­i­dend of $1.32 per share. So net net, the share­hold­ers for this year are still in a pos­i­tive po­si­tion al­beit a mi­nor pos­i­tive po­si­tion. And that’s not the full-year div­i­dend be­cause we still have to de­clare the div­i­dend for the fourth quar­ter.

“So I think I’m still gen­er­at­ing pos­i­tive val­ue for my share­hold­ers which, if you com­pare with the mar­ket as a whole, is prob­a­bly do­ing rea­son­ably well,” the bank­ing ex­ec­u­tive said.

First Cit­i­zens opened its doors to its first cus­tomers in Sep­tem­ber 1993 and cel­e­brat­ed its 30th an­niver­sary two months ago.

The bank was formed as a re­sult of the merg­er of three strug­gling T&T bank: Trinidad Co-op­er­a­tive Bank (TCB); Na­tion­al Com­mer­cial Bank (NCB) and Work­er’s Bank.

Ac­cord­ing to the First Cit­i­zens his­to­ry on its web­site: “The TCB faced grave liq­uid­i­ty is­sues and was fre­quent­ly un­able to make any of the re­serve de­posit re­quire­ments of the Cen­tral Bank of T&T. The NCB was deal­ing with in­creas­ing liq­uid­i­ty pres­sures, and the Cen­tral Bank was forced to step in and take ac­tion to help avoid a run on the bank. Work­er’s Bank had been hin­dered by ru­mours of crip­pling bad debt. It was time for the Cen­tral Bank to make a bold move.”

With $44.6 bil­lion in as­sets as at June 30, 2023, First Cit­i­zens is be­lieved to be T&T’s sec­ond-largest bank­ing group be­hind Re­pub­lic Fi­nan­cial Hold­ings Ltd with $114.4 bil­lion in as­sets. Sco­tia­bank has as­sets of $29.2 bil­lion.

The bank had 17,278 share­hold­ers as at Sep­tem­ber 30, 2023, the largest of which is Cor­po­ra­tion Sole (the Min­is­ter of Fi­nance) with a 60.11 per cent stake.

Dar­basie is in her ninth year as the group chief ex­ec­u­tive of­fi­cer of First Cit­i­zens, as she was ap­point­ed to the po­si­tion in April 2015.

The bank’s per­for­mance has grown un­der her stew­ard­ship: its af­ter-tax prof­it as at Sep­tem­ber 30, 2015, to­talled $630 mil­lion. By Sep­tem­ber 2022, the af­ter-tax prof­it of First Cit­i­zens in­creased to $734 mil­lion, just short of the $752 mil­lion the bank de­clared in 2019, the year be­fore the COVID-19 pan­dem­ic.

She has strong aca­d­e­m­ic cre­den­tials, which in­clude a BSc de­gree in elec­tri­cal en­gi­neer­ing with First Class Ho­n­ours from The Uni­ver­si­ty of the West In­dies, an MBA with dis­tinc­tion from the Uni­ver­si­ty of War­wick, and a Mas­ter of Sci­ence (MSc) with dis­tinc­tion from the Uni­ver­si­ty of Es­sex.

Be­fore her ap­point­ment at First Cit­i­zens, she held sev­er­al se­nior po­si­tions at Citibank T&T in­clud­ing man­ag­ing di­rec­tor of the Mer­chant Bank, coun­try trea­sur­er, and mar­kets head.