The price of Guardian Holding’s stock shot up four per cent in Trinidad after Jamaica’s largest banking conglomerate NCB Financial Group announced it was seeking to acquire control of the Trinidadian company in early December.
The takeover, if successful, would allow NCB Financial Group to claim the label of a regional banking powerhouse, but the Jamaican bank would still fall well short of CIBC FirstCaribbean International Bank, which is currently twice its size when measured by assets.
But market analysts say NCB Financial Group could eclipse Barbados-based Sagicor Financial Corporation, whose core business line, like GHL, is insurance.
NCB Financial is offering US$2.35 per share to buy another 32 per cent or 74.23 million more shares in Guardian Holdings, to grow its stake to 62 per cent. It would cost the bank US$174.44 million at full take up. NCB first acquired 29.99 per cent of the company in May 2016, and its move to increase its stake was widely anticipated by the market.
The current bid price for GHL is the equivalent of about TT$15.98 – a discount on the stock price, which was valued at TT$16.55 before the bid went public. The GHL stock climbed to TT$17.22 on the day of the offer, which remains open to shareholders until January 12. NCB Financial gained nearly three per cent in Kingston to close at $95.46, but did not trade in Port-of-Spain.
The Jamaican bank insists its offer for GHL is being made at a premium, based on the stock’s historic prices going back a year.
NCB Financial’s assets are worth about US$5.5 billion, while GHL’s is the equivalent of US$4.7 billion. CIBC FirstCaribbean tops them both with assets of US$12.25 billion, but NCB is now in striking distance of Sagicor Financial, which holds around US$6.77 billion of assets.
“The big issue is that they will emerge as a major regional player,” said an analyst who requested anonymity. “They will be a big bank and a big insurance company, which will pose a substantial challenge to Sagicor.”
NCB Financial already has a presence in various regional markets, but Guardian has a much wider network in 22 countries, including the Dutch Caribbean.
Inside Jamaica, the GHL acquisition is also expected to create ripples throughout the local insurance sector, said the analyst, who noted that it would concentrate four insurance businesses under one group – namely life insurers NCB Insurance and Guardian Life, and general insurers Advantage General Insurance and Guardian General.
“It would become substantially profitable for the NCB group if they can leverage insurance services with the largest branch network in the island. It would create interesting possibilities for other products,” the person said.
“Remember, on the general side, AGI dominates motor and Guardian General is big on property.”
CEO of Stocks & Securities Limited Mark Croskery raised the prospect that NCB may be positioning for another try at a listing of the bank on the United States market.
“Excellent move by NCB Financial Group in spreading its wings in the Caribbean and the region,” said Croskery.
Majority owner and Chairman of NCB Financial Group Michael Lee-Chin has signaled that the bank’s regional expansion programme has more elements to come.
“By leveraging GHL’s scale and resources, our regional expansion plans will be accelerated,” he said in a statement on the GHL bid.