Bahamas - FirstCaribbean International Bank

Chairman’s ReviewIn late 2002, consequent upon the combinationof CIBC Bahamas Limited and Barclays BankPLC’s retail, corporate and international bankingoperations in The Bahamas, your Board electedme to the position of Chairman of FirstCaribbeanInternational Bank (Bahamas) Limited, and I amhonoured to have this opportunity to present theCompany’s 2002 results.The combination of CIBC Bahamas and Barclaysin the Bahamas and the Turks and Caicos Islandswas clearly the most significant development in2002.Whereas CIBC Bahamas Limited had 13 branchesand an asset base of $1.3 billion, FirstCaribbeanInternational Bank (Bahamas) Limited has 23branches and an asset base of $3.2 billion.The shareholding of the Bank has also changed.Whereas CIBC Bahamas Limited was owned byCIBC West Indies Holdings Ltd. (90.9%) and alargely Bahamian minority (9.1%), theshareholding of the combined bank is sharedbetween FirstCaribbean International BankLimited 95.8% and the minority 4.2%approximately.Subsequent to the end of the reporting period,FirstCaribbean Bahamas’ Rights Issue wasannounced. Pursuant to the 3 for 5 Rights Issue,minority shareholders have the opportunity toacquire 3,000,000 shares at a price of $6.10. If allrights are taken up, the minority holding will beapproximately 6.7%.We continue to believe that the combination willenhance shareholder value despite the presentlevel of pro-forma combined earnings due in themain to the historically low rates of interest. Weexpect that the combined Bank will achievequantifiable synergies and economies of scaleand scope and in addition, any increases ininterest rates will have a favorable impact on theresults of the company.For 2002, a total dividend of 33 cents per sharewas paid based on the results of CIBC BahamasLimited for 11 months to September 30. Theperformance of both legacy banks wasnegatively affected by historically low interestrates and compression of net interest margins.GovernanceAll successful banks must have a rigorous androbust culture of risk management andinternal control, with appropriate systems toensure that they are managed in a prudentmanner. An equally important requirement iscompliance with the regulatory requirementsin the jurisdictions in which they operate.We have taken great care to ensure that in theperiod of integration and beyond, there areadequate organisational arrangements toensure that the requirements for control andregulatory compliance are satisfied.We expect that thecombined bank willachieve quantifiablesynergies and economiesof scale and scope...Both heritage banks have had exemplarypolicies and procedures for the managementof credit, operational and market risk andregulatory compliance. We have selected 'bestpractice' standards from our legacy banks andhave formulated our own procedures and16