Home' Trinidad and Tobago Guardian : May 4th 2014 Contents course. Investment in stocks is a risk.
But I was willing to take that risk for
the small number of shares that I
One glimpse into an alternate reason
employees would have turned down
the loan facility was given by another
At 32, she was older than the other
interviewees, and as she described her-
self "more cautious."
She told the Sunday BG that she
wanted to see how the share was per-
forming over a period of time before
investing. She said she would have had
to take a loan to buy hers and said the
shares would be used as collateral.
Essentially this means that for the
loan period, she would not be able to
sell the shares if they decreased in value
or if anything went wrong.
She said a number of employees that
she knew began to sell their shares as
the IPO scandal unfolded and said they
were able to do this because they used
their own money. Using the loan facility
took away this option.
As she observed: "You cannot make
the decision another member of the
public would be able to. That freedom
was taken away from staff and I don t
take too lightly to that."
Another female staffer who did not
purchase shares, this one a 54-year-
old, who was employed at Workers
Bank---one of the failed three banks
which government brought together to
form First Citizens---added that the
loan facility was not anything special.
"Even if the interest rate is prefer-
ential, you still don t get the preferential
treatment. That aspect of staff getting
loans is not unique to First Citizens.
All banks do it. They put you under a
microscope and they take long, dilly-
dally. It s as though you are begging."
Closer to retirement than any of the
other employees, this employee sounded
bitter, at times rancorous because,
according to her, both the union and
the bank were playing games with
workers especially with issues sur-
rounding her own pension. She said
this was why she opted out of the pur-
chase and described not buying shares
in the company as "an act of protest."
"Maybe I let my heart rule my head
and I lost out on making some money.
Sometimes money is not all. To me, I
have a moral stance, it might be stupid.
I made the decision because I was not
getting any redress with the matter."
She believed there would be enough
future business opportunities for her
to invest in to not be overly troubled
by missing out on the bank s IPO.
The 28-year-old bank employee who
bought his shares with his own money
understands why his colleague might
feel this way. The bank and BIGWU
have not settled the 2012-2014 collective
agreement yet and are moving into
another period. He said a number of
them would have liked to use their back
pay to buy shares.
"That was the comment I got from
my colleagues. If negotiations were set-
tled, they would have been able to invest
more and it would have been a better
environment in that they would have
looked at the bank more favourably.
And so they may have put a little more
faith into the bank and invested more."
Whether they purchased shares or
not, all of the employees interviewed
in depth had a high level of confidence
in their institution and its ability to
The 28-year-old said the share price
peaked in the early forties and, even
with the IPO scandal, only dropped to
the mid-thirties. He felt certain that,
with time, the shares would recover
and will begin to appreciate in value
However, the 32-year-old who
adopted the wait-and-see approach
said it is critical that the bank take a
firm hand with the issue. According to
her, since the scandal broke, the bank
has not been doing enough damage
control and that this could eventually
begin to affect the price of the bank s
"Peter Permell was all over the news-
papers. The newspapers were flooded
with what he was saying. We had influ-
ential people in newspapers saying
things like, should we take our money
out of this bank?
"And when you have people doing
things like that, people see these things
in the public and we do not have an
illiterate public, especially people who
invest their money. Every day you face
people coming into the bank asking
questions saying that I am reading this,
I am reading that. I have had people
coming to the bank asking to take out
their money. Somebody needs to say,
this is what we saw and encountered,
we fixed it and let s move on from here."
All of those interviewed said the rev-
elation of Phillip Rahaman s stock pur-
chase and the surrounding accusations
were as much of a surprise to them as
they were to the public.
The 28-year-old who invested in
shares said the first clues that something
might be amiss came when the annual
report was published and some employ-
MAY 4 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
NEWS | SBG7
From Page 6
ees commented on the number of
shares that were bought by Mr
Rahaman. However, the older
staffer who did not purchase shares
said based on her experience with
the stock market she thought
something was wrong when the
price of the shares almost imme-
diately went up to $43.00.
"What I was sceptical about,
just the initial share price was good
but when I saw how it was going
up, I know that in certain countries
people buy up large amounts of
shares to drive the price up, and
then they sell it and make a profit.
When they start selling it, the price
goes down. And I was a little wary
Given what the workers have
had to say about the situation,
their motivations to purchase, or
not to, show that they even though
they only represent 7.8 per cent of
the total number of shares issued,
they cannot be written off. The
ratio: 60 per cent versus 40 per
cent reflect something deeper.
The representative union
BIGWU is not accepting respon-
sibility for the sizeable portion of
workers who did not buy shares.
According to the union president,
the proportion of those who
bought to those who did not was
closer to 50-50.
Speaking with the Sunday BG,
BIGWU president, Vincent Cabrera
termed the accusation by the
bank s executive that the union
advised workers to not purchase
shares as "silly".
He said he wanted to clarify the
union s position given some of the
criticisms that were levelled by the
bank s board and executive man-
agement that it was the union s
stance on the share purchase and
its advice to workers that caused
so many of the shares allocated to
workers to remain on the market
in the first place, creating the
opportunity for malfeasance.
"We cannot tell people to buy
shares or not to buy shares. It is
an open market. What we did tell
them was that if they did purchase
shares, they would be assisting in
privatising the bank."
At last year s IPO, the State sold
just under 20 per cent of its stake
in First Citizens and retains a 77-
per cent stake in the bank.
Cabrera said that as a trade
union, it could not allow situations
that created a disadvantage to
On the issue of the workers
being "disadvantaged," an employ-
ee who purchased 1,000 shares at
the IPO at $19.80 a share, would
have spent $19,800. At Friday s
close of trading on the local stock
market, those 1,000 shares would
have been worth $38,500---a tax-
free gain of 94.4 per cent.
In addition, the employee would
have received $1.66 in dividends,
comprising $1.09 paid out in Jan-
uary from the 2013 annual results
and $0.57 that will be paid out this
month from the six-months
between October 1, 2013 and
March 31, 2014.
The dividend plus the capital
gains (both of which are tax free
in T&T) means that the employee s
total investment would have more
than doubled in eight months---
from $19,800 in September to
$40,160 in May.
money in 8 months
On the issue of the workers being "disadvantaged," an
employee who purchased 1,000 shares at the IPO at $19.80
a share, would have spent $19,800. At Thursday's close of
trading on the local stock market, those 1,000 shares would
have been worth $38,500---a tax-free gain of 94.4 per cent.
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