Caribbean Awards for Excellence 2012: By country

Best Caribbean Investment Bank

Citi

Citi is facing an increasing challenge to its hegemony in providing investment banking services throughout the Caribbean but its physical presence in the region, derived from its local banks, has so far held off the challenges from offshore firms.

Citi demonstrated its relationships at all levels, with the bank leading on the Dominican Republic’s $250 million bond reopening, pricing at the lowest-ever rate achieved by the sovereign (6.87%). Within a couple of hours of launching the transaction, demand had hit $2 billion from 120 investors worldwide, enabling strong execution and pricing.

Another facet of Citi’s Caribbean strength in depth is shown by the $88 million domestic bond it arranged for the Urban Development Corporation of Trinidad and Tobago. The proceeds were used to refinance debt for the construction of the Ministry of Education Tower and the bank built a book subscribed 1.5 times through local investors.

As well as international and local DCM, Citi is active in export and agency finance and loans, and provides cash management and FX-related services to companies throughout the region. It is also involved in Caribbean M&A and in the past year provided divestiture financing for La Aurora Cigar Company.

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Bahamas

Best bank: Bank of the Bahamas

The Bahamas is heavily dependent on tourism and offshore banking, both of which have been hit hard in recent years. However, the country’s recovery has begun, with tentative GDP growth of 2% in 2011. Bank of the Bahamas grew in a similarly cautious manner: despite already having more than double the required level of capital reserves, it added to its tier 1 capital. The bank grew its market capitalization by 33% and total revenues by 11% but reported lower profits (down 34%) and return on equity down to 4.3% from 6.65%. Profitability in the financial sector was generally lower but at least Bank of the Bahamas can point to recent investments for growth; it invested in its remodelled branch network and introduced extended staff hours. The bank has also targeted mortgages as an area for growth and grew its residential real estate portfolio by 4.9%. The market clearly seems to think the investments will pay off: the bank’s share price rose 40% in 2011.

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In a tough operating environment HSBC Bank Bermuda maintained a strong balance sheet. On an underlying performance basis (HSBC Insurance Bermuda’s results are no longer reported by the bank after an internal structural reorganization) the bank grew revenues by 5.6% and net income by 2.4%. Total assets grew by 25.6%, with the bank growing deposits by 33.2% to a domestic market share of 55.8%. Loans grew more slowly, by 11.12% to a market share of 39.1% and the bank’s eye-catching NPL ratio of 4.85% might hint at the lower rate of expansion in this area.

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In recent years the Dominican Republic’s service economy has surpassed in size its traditional export industries (sugar, coffee and tobacco) as tourism and telecommunications have grown and free trade zones have been effective in driving economic growth. The country, still heavily dependent on the US, managed 4.5% growth in 2011 and Banco Popular grew net profit by 5.2% despite the introduction of a new tax for financial institutions (banks have to pay 1% of their productive financial assets except for sovereign bonds). The bank increased total assets by 15.2%, deposits by 14% and its loan portfolio by 15.9%. Return on equity was 22.4%.

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Jamaica finally returned to positive growth in 2011, with a 1.5% rise in GDP following falls of 1.2% in 2010 and 3% in 2009. The banks have therefore been operating in an environment of weak loan demand in the business sector and record low interest rates. However, despite this environment, Scotiabank Jamaica recorded net profit of $10.6 billion. Although this was down 1% from the year before, it exceeded expectations given declining interest margins. The bank maintained its leadership in deposits (with a market share of 35.8%) and loans (35.5%), while return on equity fell to 17.6% from 20.8%.

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