|The Bahamas Investor Magazine
July 23, 2015
July 23, 2015
A clear and progressive strategy has rarely been as vital to success as it has been in recent years. Regulatory and compliance pressures on the banking and wealth management industries have meant that it has been difficult to remain profitable without robust reform and strategic planning. This is something CIBC FirstCaribbean International Bank has taken to heart and following a period of rigorous streamlining it is now poised for growth, expanding services and rolling out new private wealth management centres across the region.
At the forefront of The Bahamas operations are two Bahamians with nearly 50 years of combined experience in banking and wealth and estate planning.
Carmen Butler, who heads up the jurisdiction’s trust arm of the private wealth management offering at the bank, says that recent changes in the global regulatory and investment environment have actually benefited the industry in terms of professionalism and the quality of service.
“It has forced our industry to be much more technically proficient. Although it has made it more complex to administer the type of business we are offering, I like to view it as an opportunity to define the markets where we can grow and in which we can specialize,” says Butler. “Some international financial centres are struggling, but it is going to come down to competence and our ability to deliver solutions in a controlled manner and respecting clients’ financial privacy. That is what we are focusing on.”
Managing director of banking services in The Bahamas and the Turks and Caicos Islands Marie Rodland-Allen also believes that it helps focus the bank’s strategy. “The regulatory environment is now at its most challenging and we have to constantly understand where those challenges are and where we can compete, while remaining compliant.”
Results of restructuring
So far, CIBC FirstCaribbean has managed to do that. “We did have some challenging times, but we adjusted our business model so that we could ensure profitability, even amid what was a really low growth environment,” says Rodland-Allen. “We are now in a good position to take advantage of the recovery in the region when it comes and there are some promising signs, particularly in The Bahamas.”
Recent financial results bear testament to this. For the period ended January 31, 2015, the CIBC FirstCaribbean Bahamas operations recorded net income of $13.5 million, an increase of $5.4 million, when compared with last year. This performance is its best quarterly financial performance in four years over the same period. For the three months ended January 31, 2015, the group, which is headquartered in Barbados, recorded net income of $26.6 million, which is its best performance since 2010.
Rodland-Allen attributes the improved performance to lower loan loss impairment expenses and lower operating expenses, which, she adds, more than off-set lower revenues.
“Even though total revenue was down $5.3 million year- over-year due to lower loan earnings and lower gains from investment security sales, loan loss impairment expenses were also down significantly by $9.7 million compared to the prior year.”
She also says that operating expenses were down by $1.1 million compared to the same period last year, as the bank continues to benefit from expense control initiatives and savings from the ongoing restructuring programme.
CIBC FirstCaribbean’s Tier 1 and total capital ratios remain strong at 28.8 per cent and 29.1 per cent respectively, well in excess of applicable regulatory requirements.
“Recent results are very encouraging and we will keep plugging away. We are determined to grow and last quarter generated the best results we have seen in several years, so we remain optimistic,” says Rodland-Allen.
In the trust and wealth management arena, Butler is also bullish. “Private wealth management is a strategic priority and it complements a larger strategy for the bank. We are very focused on growth and we are very excited about our ability to grow in this market. I am confident we are going to deliver good results in this area.”
Expanding the market
So, where are these “good results” going to come from? A major player in the region, FirstCaribbean International Bank was created in 1992 when Barclays Bank PLC based in London and Canadian Imperial Bank of Commerce (CIBC) based in Toronto combined their retail, corporate and offshore Caribbean banking operations. On December 22, 2006, CIBC became the majority shareholder in the organization, now holding 91.5 per cent of the bank’s shares in the co-branded CIBC FirstCaribbean International Bank. Offering a full range of financial services, it is the largest, regionally-listed bank in the English and Dutch speaking Caribbean, with more than 2,900 staff, 66 branches, 22 banking centres, and seven offices in 17 regional markets.
CIBC FirstCaribbean operates 15 branches and agencies, 38 instant tellers, a wealth management/ International Banking Centre, a Mortgage and Loans Centre and a Corporate Investment Banking office in The Bahamas.
Having established its place in the regional banking marketplace, CIBC FirstCaribbean is now expanding its wealth management services, opening an office in the Cayman Islands in 2014 and one in The Bahamas at the beginning of this year. A similar centre in Barbados is in the pipeline.
The market for these services will come from both existing and new markets, says Butler. “We are leveraging our significant presence in the Caribbean to cross sell to our existing client base and in new markets in Latin America,” she says. “We are looking at strategic markets where we have good relationships–Brazil being one of them, Mexico another.”
Having travelled extensively in Latin America, Butler says that the environment is now becoming more welcoming, after decades of uncertainty. “There were a lot of global regulatory changes in the 1990s, and thereafter, that severely restricted what you could and could not do in jurisdictions such as Mexico. But in many cases legislation has been enacted so that a lot of business that went through Europe and especially Switzerland is now coming back to The Bahamas, mainly because we have been proactive in adapting our regulatory environment.”
Meeting client needs
Certain products are well-suited to the Latin American and Caribbean markets, says Butler, such as SMART Funds, but she is quick to point out that the bank’s wealth management offering is much more client driven and solutions based than simply about selling products. “There are fundamental services that we have offered including trusts, funds and private investment companies that present interesting solutions to clients in the region. The products are in response to those needs and our role is to service clients to find the best solutions and deliver them in an effective manner to meet those objectives.”
This is made more complex by the changing lifestyle choices of high-net- worth individuals and their families. “This business has changed drastically,” says Butler. “We see more and more global families. The days when one family would be in just one jurisdiction are really long gone. We have to stay abreast of changing requirements across multiple jurisdictions and you have to realize that solutions change as laws change. You have to make sure that you are ready and able to deal with the impact of those changes to meet those requirements from both a regulatory perspective and a client perspective.”
Core to providing a premium service of this kind, of course, is knowing your client. “It is all about relationship management,” says Rodland-Allen. “The stronger your relationship with the client the better you understand how to meet their expectations. Ultimately, we want to increase our share of wallet from our clients and the way you get that share is by really knowing that client and thinking about how you can bring the entire bank to them. Each customer is different and expectations are much higher now than they used to be. What is most satisfying is to exceed those expectations.”
A passion for service
To maintain this at high and sustained levels not only requires experience and understanding, but also a genuine interest in finding the right solutions for clients. Both Butler and Rodland- Allen were selected for their roles with FirstCaribbean following successful careers with Citibank. The daughter of a banking family, Rodland-Allen chose to study finance after toying with the idea of a career in medicine. “I had friends who were in investment banking and they thought I would thrive in that environment. It was actually very exciting and highly competitive. My interest just grew from there.”
Having studied business and Spanish, Butler also found that financial services were a perfect fit for her knowledge and abilities. “I started in wealth planning and estate planning as a young graduate and it was very intriguing. I found that although it obviously benefited people financially, there was also the human element of providing support for people, sometimes in very difficult periods of their lives and with very different needs. I found it very satisfying to help people and even now, when we get a thank you from a client, it is a fantastic feeling. That is what we are all about in our business.”
Back to The Bahamas
Being able to conduct that business in their homeland is another bonus. Born in Nassau, Butler and Rodland- Allen are part of a key demographic of professional Bahamians that have come back from either studying or working abroad to take up senior positions in local or international banks in The Bahamas. Rodland-Allen joined CIBC FirstCaribbean in 2010 and although she was not particularly looking to come home at that point, she felt the opportunity was too good to pass up. “I always thought I would come back to The Bahamas, perhaps later in my career, but FirstCaribbean is very strong in the region and it was a very exciting opportunity.”
Butler, who joined the bank around 18 months ago, says that The Bahamas is of strategic importance for FirstCaribbean and that was part of what attracted her to the role. “When we speak to clients, most of them know The Bahamas and what it represents. It is a jurisdiction that has been tried and tested and they know that the laws are in place to protect them and their investment. They are confident that we have a cadre of financial services professionals and lawyers that are here to help them. FirstCaribbean is looking to leverage those advantages. It feels good to be part of that.”
According to Rodland-Allen, the industry provides the opportunity to continually learn and grow, both professionally and personally. “The nature of the environment now is that clients can go anywhere to find wealth management solutions and they can move their business very quickly. This means that you have to be extremely responsive, nimble and dynamic to stay ahead. It is very demanding and you have to be ready for that challenge.”
As the bank’s services expand, it will be looking to take on new people. The trust and wealth management team currently numbers around 40. “We hire for attitude and train for skill. We are looking for people who will work hard and have the right attitude. Don’t assume that you have to have a finance degree or banking experience to be successful in this field. If you are perseverant and have the right attitude, then the sky is the limit,” says Rodland-Allen.