Home' Trinidad and Tobago Guardian : December 19th 2013 Contents BG4 | COVER STORY
BUSINESS GUARDIAN www.guardian.co.tt DECEMBER 2013 • WEEK THREE
The decision by the Government of Barbados to
retrench 3,000 public sector workers by the end
of the first quarter of 2014 has caused almost as
much shock and consternation in T&T as in Bar-
bados, a country that has attracted billions of
dollars in investment from T&T companies.
Among the local, publicly listed companies with large invest-
ments in Barbados are Neal & Massy, ANSA McAL, TCL,
Republic Bank and First Citizens, while privately held companies
like Associated Brands, Bermudez and the Mouttet group of
companies supply food products worth millions of dollars a
year to the Caricom nation.
The retrenchment of the 3,000 Barbadian workers is expected
to have a chilling impact on the demand for goods and services
on the island, as those affected slash their spending, restructure
debt obligations, draw down on their savings and sell assets.
As the retrenched Barbadian workers attempt to restructure
their lives and their finances, financial institutions operating
in Barbados are certain to feel the pinch.
One of those financial institutions is likely to be Republic
Bank, whose single, largest shareholder is the Clico Investment
Fund, which owns 40 million Republic shares. One of the
options that the Government is considering to recover its $20
billion from the CL Financial bailout is to divest all of the
remaining shares once held by the collapsed group.
In May, Republic Bank announced that it had acquired the
remaining 34.86 per cent shareholding in the former Barbados
National Bank, which became a wholly owned subsidiary of
the Port-of-Spain-based bank.
Republic Bank recorded a 1 per cent increase in its after-
tax profits for the financial year ending September 30, 2013.
The bank's profits were dragged down by a 30 per cent
decline in the profits of its Barbados subsidiary, a loss of $18.2
million recorded in Grenada---mainly due to a higher level of
provisioning for loans and investments---as well as a loss of
$75.7 million at Eastern Caribbean Financial Holdings, the
parent company of the Bank of St Lucia.
The retrenchment of 11 per cent of Barbados' public sector
workforce is expected to impact further the operations of
Republic Bank in Barbados, which accounts for 15.3 per cent
of the parent company's total assets and 18 per cent of its
total loans and advances.
Last week's announcement will impact Republic because
while non-performing loans in T&T amounted to 1.4 per cent
for the year ending September 30, in Barbados the level of
bad loans was more than eight times higher than T&T at 11.7
per cent. This double-digit non-performing loan portfolio in
Barbados occurred before the announcement of the mass
Republic Bank's profit contribution from Barbados declined
by 30 per cent for the year ended September 30, 2013.
Republic Bank executive director, Nigel Baptiste, said he is
not worried about the bank's exposure to the economic woes
of Barbados given its capital adequacy of over 21 per cent. He
said from his perspective, there were two areas to look at: the
profit contribution of the Barbados subsidiary to the parent
and goodwill impairment (if any).
The reduced demand for goods and services in Barbados
is expected to hit local manufacturers and exporters hardest
as T&T is the single largest provider of imports to Barbados,
supplying goods worth an estimated US$620 million in 2012.
T&T's exports to Barbados account for 38 per cent of the
country's US$1.6 billion of imports in 2012, far outstripping
imports by Barbados from the US.
State-owned companies Petrotrin and Phoenix Park Gas
Processors supply petrochemical products to the Caribbean
nation and Petrotrin currently processes crude oil under an
agreement with the Barbados National Oil Company ("BNOC").
Petrotrin processed approximately 1,033 bpd of Barbados crude
oil for the nine months ended September 30, 2013.
T&T exports a wide variety of packaged food and petroleum
products to Barbados and the main domestic suppliers of food
products to the Caricom neighbour---Associated Brands, SM
Jaleel, Vemco and Bermudez (which purchased a biscuit oper-
ation in Barbados some years ago)---are all expected to feel the
pinch of a slowdown in exports.
Mouttet's in for the long haul
Vemco's Christian Mouttet, a former T&T Chamber of
Commerce chairman, described Barbados as one of the com-
pany's larger export markets.
For Vemco, which exports pasta, powdered milk and condi-
ments "2013 has not been a bad year" for Barbados.
Barbados is a resilient economy with a disciplined population,
which is what has attracted many T&T businesses to invest
there, Mouttet said, adding that "in one sense, we are happy
to see that hard decisions are being taken."
On the other hand, he lamented the high barriers with
regard to the protection of industries that are too small to
He said these barriers, which included tariffs as high as 170
per cent on specialty foods imported for the TGI Friday, caused
Prestige Holdings to close the restaurant outlet earlier this
"We started off at a huge disadvantage in that market," he
The family group's investment arm, Mouttet Capital, has
exposure to Barbados in a Marriot Courtyard hotel and a retail
shopping centre in the Warrens area. We are quite invested
in that market.
Mouttet said: "Although hotel occupancy and tourism arrivals
are down in general in Barbados, there have been different
impact depending on the type of hotel. Marriot caters more
to the business sector and the hotel has maintained reasonably
good occupancy levels and rates for this year."
The first stores in the shopping centre, which comprises
40,000 square feet and 18 retail locations of proven tenants,
are due to open this month. The shopping centre will be
anchored by a major retailer, Cost-u-Less.
He described Warrens as an excellent location, as the gov-
ernment there had just completed major road expansion.
Mouttet said the company is now planning a phase two of
the Warrens development.
"We have another 20 acres of land in the vicinity and we
have approvals for 230,000 square feet of which 40,000 will
Barbados pain is T&T's nightmare
...We'll ride out the down cycle says investor
Continued on Page 5
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