Amid an initial public offering (IPO) issue that has engulfed the State bank, First Citizens has directed its retail and commercial bankers to reach out to customers and assure them of the bank’s stability.
The Express understands that since Monday, First Citizens personal bankers have been scheduling meetings with clients following media reports on how the bank’s former chief risk officer was fired after acquiring 659,588 shares during the IPO.
The Express understands while there have been no major client complaints, the company is being proactive to protect its customer base and ensure its competitiveness in the market.
Customers who spoke to the Express say they were not ready to quit the bank, but they were awaiting the outcome of investigations into the IPO.
Several customers expressed dissatisfaction about not being able to acquire more shares for which they had bid during the IPO.
Last week, the bank issued a notice of an annual general meeting scheduled for May 12, which was posted on the Trinidad and Tobago Stock Exchange (TTSE).
The bank’s IPO was investigated by auditors PricewaterhouseCoopers (PWC) after its former chief risk officer, Philip Rahaman, acquired more than 650,000 shares and disposed of most of them four months later.
Rahaman was fired on March 25 after the board said it had lost confidence in him.
But he was not the only employee to acquire a volume of shares from a proposed 5,000 at a discounted price per employee.
According to IPO allotment for staff, which was copied from the National Enterprises Ltd (NEL) model, there was no cap in place for employees.
Seventy employees subscribed for more than the allotted 5,000 shares, with 39 of the 70 between 5,000 and 10,000 shares, and another 19 between 10,001 and 20,000 shares. There are now 11 employees, as well as Rahaman, with over 20,000 shares.
Following Rahaman’s sale, First Citizens chief executive Larry Nath is now the largest employee shareholder at the bank. He owns 215,000 shares. Nath applied for the shares during the period August 8, just before the IPO was closed.
Rahaman’s volume purchase and disposal to his family and family-controlled companies have launched several investigations—by the Trinidad and Tobago Stock Exchange (TTSE), the Securities and Exchange Commission (SEC) and the Central Bank.
Prime Minister Kamla Persad-Bissessar, who spoke to reporters at the American Chamber’s annual general meeting yesterday at the Hilton Trinidad, St Ann’s, said: “I am awaiting the various reports from (Finance) Minister (Larry) Howai and therefore it will be premature in making any comments. I am awaiting the SEC report, Howai’s own internal reports. I had received a letter from the chairman of the board (Nyree Alfonso) and I will have passed that letter on to the Attorney General, who is looking into the matter.”
Last week, US ratings agency Moody’s affirmed the bank’s financial strength, but changed its outlook from stable to negative because of weakening profitability indicators at the bank during the past three years.
Moody’s said the negative outlook is not directly related to recent corporate governance concerns stemming from the ongoing audit on the Initial Public Offering (IPO), but additional “downward ratings pressure could arise, however, should governance issues prove to be more widespread”.
Howai was also questioned on the bank’s declining share price last week and responded: “The institution is strong, well capitalised and very profitable.
“It built up its franchise in the most difficult circumstances arising from the failure of its three component banks and with the stigma of being local and unable to compete against well-established players all of whom had an international background. I am certain that the institution will be able to capably deal with the risks arising from this matter.”