Former RBTT investors slow to cash in shares

Published Date 26/06/2008

Sookoo disappointed with pace of transactions

BY SANDRA CHOUTHI

sandy9@ttol.co.tt

Royal Bank of Canada (RBC), which closed the deal to buy the RBTT Group for US$2.2 billion on June 16, this week sold US$600 million to the Central Bank to pay local shareholders.

The T&T currency RBC received is to pay those RBTT shareholders who opted to be paid in local notes, said Suresh Sookoo, chief executive officer of the RBTT Group.

He said the bank was disappointed that despite all its media ads, it hasn’t really seen shareholders take ownership of their shares to get their consideration as quickly as possible.

“As of this afternoon (Tuesday), out of a 16,000-plus shareholder base, only about 5,000 have tendered in their forms and in fact have got their consideration.”

Sookoo urged shareholders to come for their money.

He said those shareholders who filled out the necessary forms began receiving their cheques and share certificates—from Monday.

Sookoo said shareholders need to send in their RBTT share certificates or their last statement from the T&T Central Depository for their payments to be prepared.

He said the failure of shareholders to send in the forms means they won’t get dividends from RBC from August 22 based on its Q3 results.

He said any RBTT shareholder who has 15 or less RBC shares can go to RBTT’s West Indies Stockbrokers Ltd (Wise) where they can trade them in for a nominal fee, Sookoo said.

“If you need to trade or do anything with those share certificates, talk to Wise.”

The RBTT/RBC transaction was a landmark one, Sookoo said.

“It was landmark in that the only previous transaction that had trans- national type, cross-border regulatory approvals required would have been the FirstCaribbean International Bank (FCIB) transaction. I think this transaction happened a lot faster.”

FCIB was a merger of Canadian Imperial Bank of Commerce and Barclays Bank.

Regulatory approval of the transaction involved RBC officials becoming familiar with the requirements of the new Financial Institutions Act (FIA).

“The main issue was the new parent company, RBC Financial Caribbean Ltd, our Central Bank, knowing we are at the cusp of introducing a new FIA, basically wanted the deal to conform to the new Act,” Sookoo said.

Inflation

With the inflation rate at ten per cent, Sookoo added his two cents’ worth on the hot button subject.

“I think we are in a unique position where the Central Bank in particular is trying to restrict inflation and has a restrictive monetary policy in place.

“However you cut it, you have an expansionary fiscal policy, and while the government is trying its best to mitigate that continuous inflow of money, it’s a challenge.”

And that’s why we are seeing the rate fluctuating between eight and ten per cent.

It has also been negatively affected by world events in terms of food prices and the shortages we see in the world.

“It is a combination of factors, but the underlying thing is our economy is, in fact, overheating and driven a lot by government spending, fiscal spending.”

He said the characteristics of spending today are similar to the 1970s oil boom.

“This is a country of plenty at this point in time and you have a lot of money chasing few goods. The recipe for that is inflation and higher costs.”

He said the dilemma from a regulatory and finance minister’s standpoint is the desire to see those financial resources—loans—chanelled to productive use, that is, creating employment and sustainable development.

He said higher disposable income means people are buying new cars and new appliances, which has fuelled the demand that is being filled by banks, credit unions and higher purchase houses.

“It is all part of an economy that is doing well.”

Depository receipts

Sookoo said the depository receipt programme being developed by the Securities and Exchange Commission (SEC) as an investment instrument for former RBTT shareholders, will not be ready by the government-declared date of July 2.

“I don’t think it’s going to happen by July 2.”

Depository receipts are derivative of stocks not listed or traded on the T&T Stock Exchange. The programme is expected to be launched with depository receipts derived from RBC shares.

Sookoo said the SEC had done a lot of good work in putting the framework in place for depository receipts, but the Ministry of Finance had to put in place regulatory and legislative changes.

He said while the RBTT/RBC transaction was related to the issue of depository receipts, they were never expected to coincide.

“I think in the early days, there was an expectation that it would be ideal if, as you come out with the closing of the transaction, you had the TT depository receipts available, but practically, everyone knew that timeline was not necessarily doable.

“It is a new instrument. Yes, it is a derivative of the overall RBC share, but you have to educate the shareholder. You have to educate the public. You have to work out the mechanics of how would the certificate actually be issued. Would it trade across the stock exchange? What is the role of the SEC?

“As committed by RBC from day one, work has been going on. There have been several joint meetings with the SEC and the Ministry of Finance with RBC, so that is in train. The timing for it is a little bit indeterminate.”

Growing the stock exchange

Sookoo said not only has the T&T Stock Exchange lost RBTT Financial Holdings, but Angostura Holdings is majority-owned by Clico, Furness Trinidad and LJ Williams are not public companies and Barbados Shipping and Trading is now part of the Neal and Massy Group.

He said the conditions have not been created to get large, family-owned, well-run, private companies to go public.