"We are working to find a result," says Ewart Williams, governor of the Central Bank of Trinidad and Tobago. - CONTRIBUTED

Canadian Imperial Bank of Commerce (CIBC) has made a proposal to the Trinidad government to acquire at least a 55 per cent stake in Republic Bank, well placed sources inside the finance ministry tell the Financial Gleaner.

But the proposal, while on the table, is not now being actively considered, because the central bank is con-centrating on selling other CL Finan-cial assets at this time, said the insider.

Reports of CIBC's interest in Republic Bank continue to percolate, with speculation that the bank wants the 55 per cent stake that CL Financial held in Trinidad and Tobago's largest commercial bank

But to date, there has been no official admission or denial that CIBC is making its second attempt at acquiring control of the profitable banking outfit that the Trinidad authorities have placed on the market after taking control of the bank shares when CL Financial sought their intervention in the bail out of three of its companies last month.

First Citizen's Bank is being used as the holding vehicle for the Republic Bank shares.

One of the conditions of the bail out is that CL Financial's 55 per cent shareholding in Republic Bank will be divested to finance a US$1 billion deficit in the Statutory Fund obligations of CL Financial affiliates.

Republic Bank Managing Director David Dulal-Whiteway said foreign ownership of the bank was neither going to enhance its profitability nor make it perform any better.

"We are not overly concerned about any foreign bank making an offer," Dulal-Whiteway said.

Republic bank's balance sheet, he said, indicates that it has been out-performing other foreign banks operating in the Caribbean. The bank commands assets of TT$41 billion and has a net worth of TT$5.4 billion.

It made net profit of TT$1.3 billion at year end September 2008.

It is not the first time that CIBC is seeking to take a stake in Republic Bank.

CL Financial chairman Lawrence Duprey confirmed that he had completed a deal for CIBC to buy the Republic Bank shares eight years ago, but was discouraged from divesting such a large portion of a local bank to foreign owners.

Reports of CIBC's second try emerged a week ago when The Express newspaper in Trinidad quoted a finance ministry source as saying the Canadian bank had approached the government for an urgent meeting. Since then the story has been picked up internationally.

But the Trinidad government is downplaying the reports.

"I don't know that Government has any position on that matter at this point in time and quite frankly before you determine that issue, one has to determine other issues," he told reporters.

"At this point in time there is nothing to suggest that a decision is needed on that matter and, therefore, it is not something that is being considered."

Analysts have not ruled out an offer from Scotiabank and Royal Bank of Canada.

The authorities say the 55 per cent share will be sold, and that the proceeds would go to the government and not Duprey's outfit.

"We are working to find a result," said central bank governor Ewart Williams.

Bail-out

"No matter who gets the shares, the resources will return to the Government," was all he was prepared to say when questioned about the CIBC interest in Republic Bank.

The sale of the Republic block of shares will cover shortfalls in the statutory fund of insurance subsidiary CLICO, and other struggling CL Financial companies.

"We will use the resources to fill the gap," he said. "This is not in doubt, it is going to happen."

If CIBC does get its stake in Republic Bank, it will expand the Canadian company's regional banking business portfolio, adding to its more than 90 per cent ownership of FirstCaribbean International Bank.

Before Royal Bank of Canada (RBC) acquired another Trinidad banking business, RBTT, in 2007 for US$2.2 billion, FirstCaribbean was the region's largest banking group with assets of US$12 billion.

CL Financial was forced to seek government's bailout of three troubled companies - Colonial Life Insurance Company (CLICO), the CLICO Investment Bank (CIB) and British American Insurance Company (BAICO) after running into liquidity problems.