The Gleaner - March 4, 1999

FINSAC sells CIBC stake

FINANCE MINISTER Dr. Omar Davies yesterday said FINSAC has sold its 25 per cent stake in CIBC Jamaica to parent company CIBC West Indies (WI) Holdings for $288 million.

The CIBC Jamaica sale is the largest disposal yet by FINSAC and is a prelude to other disposals that could include Caribbean Cement Company and Eagle Unit Trust Management Company. The Finance Minister is expected to unveil these before tabling the Estimates of Expenditure for the budget of the upcoming fiscal year on March 31.

CIBC WI will pay $6 per share for 48 million units and increase its holding in the local banking group to 80 per cent. The sale comes after the May 22, 1997, acquisition of the CIBC stake from Life of Jamaica (LoJ) for $513 million.

The initial purchase, at around $10.60 per share, came at the height of LoJ's troubles. While the current sale price reflects a more than $4 per share loss for FINSAC, it is more than twice CIBC Jamaica's $2.80 trading price on Tuesday. CIBC shares have fallen sharply over the last year as stock prices locally and in Barbados, the regional headquarters, have dropped.

CIBC WI Holdings president and chief executive, Michael Mansoor, also confirmed the appointment of financial analyst Anne Shirley as CIBC Jamaica's chief executive-designate. At the bank's annual general meeting yesterday, Ms. Shirley's appointment was not agreed on in time to be properly ratified at the meeting. She is expected to be appointed at a subsequent board meeting.

A month ago The Gleaner revealed that she was set to head the organisation, one of three major international banks in Jamaica.

While not ruling out redundancies, the bank said it hoped to focus on more profitable niches. Mr. Mansoor said the bank's 2,000 minority shareholders should continue to hold the stock and that it had no intention at present to buy the outstanding shares. However, the long-term plan is likely to see the local operation's listing come under increasing pressure, as the Barbados parent company moves to consolidate its position in regional banks.

CIBC Jamaica recorded a profit of $124 million, compared with $152 million in 1997, $126 million in 1996 and $196 million in 1995. The bank's non-performing loan portfolio, which climbed as high as 14 per cent, is down to 8 per cent.

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