Published On: Tue, Nov 12th, 2019

Foreign investors move in on St. Maarten’s banking sector

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PHILIPSBURG – Foreign investors are moving in on the banking sector in St. Maarten, After Trinidad-based Republic Financial Holdings Limited bought the activities of Scotia Bank – that will now become Republic Bank – for $123 million in August, GNB Financial Group, owned by Colombian banker Jaime Gilinski Bacal, put up $779 million for a majority share in Canadian Imperial Bank of Commerce (CIBC) FirstCaribbean.

GNB now controls FirstCaribbean banking activities in St. Vincent and the Grenadines, St. Lucia, St. Maarten. Anguilla, St. Kitts and Nevis, and Dominica. GNB also operates banks in Grenada, Guyana, Barbados, Cayman Islands, Ghana and Suriname. The company has a staff of 5,570, assets worth $10.5 billion (as of September 30, 2018) and reported a net profit for that year of $198 million.

Nationnews.com reported that CIBC will receive $200 million in cash from GNB and that it will provide secured financing for the remaining $597 million. The site also reported that CIBC expects to record an after-tax loss on the transaction of about C$135 million ($102.2 US) in the fourth quarter ended Oct. 31. Upon closing, CIBC expects to realize foreign currency translation gains estimated at C$280 million ($212.1 US).

GNB Financial is wholly owned by Starmites Corporation, the financial holding company of the Gilinski Group, which has about US$15 billion in combined assets. Starmites is registered in Luxemburg.

According to Forbes, Gilinski’s net worth was $3.9 billion as of May 2018, making him the second richest man in Colombia. Though Gilinski was born in Colombia, he resides in London. He has homes in New York, Panama, Miami and Colombia.

Wikipedia outlines Gilinski’s road to banking stardom as follows.

“In the 1990s, Gilinski acquired the Colombian assets of BCCI (Bank of Credit and Commerce International) for a nominal sum after its global collapse. Renamed Banco Andino, it became one of the most efficient banks in the Colombian banking system within four years. The Gilinski Group sold the reconstituted bank for a reported $70 million.

The family then moved to purchase Banco de Colombia for $365 million, in what was then the largest privatization in Colombia’s history. A group of premier private equity investors led by Morgan Stanley Asset Management investing $65 million, billionaire George Soros investing $50 million and Tiger Asset Management with $35 million together with more than 100 other European and North American institutional investors co-invested with Gilinski. Later, the family sold control of the bank to Banco Industrial Colombiano, and its controlling stakeholder Sindicato Antioqueño, in a deal valued at $800 million, among Colombia’s largest deals. Gilinski received $418 million for its stake and retained a minority position in the new bank as part of the deal. As of 2018, Bancolombia was the largest in Colombia with a market capitalization of $11 billion on the NYSE.

In 2003, Gilinski acquired and subsequently merged Banco Sudameris and Banco Tequendema. This merger created GNB Sudameris, a bank with assets of over US $10 billion that ranks among the largest private Colombian banks as of 2018. The purchase of Servibanca, an ATM network with over 2,600 machines, and Suma Valores, a stock exchange commission agent company, has further expanded the network.

In May 2012, HSBC announced the sale of its Latin American operations (Colombia, Peru, Paraguay) to Banco GNB Sudameris for $400 million in cash.

In September 2013, Banco Sabadell announced that Gilinski became its largest shareholder as the anchor investor in a US $1.8 billion capital raise. Through the ABB and share rights issue, Gilinski’s investment totals approximately $500 million. Banco Sabadell is the 5th largest bank in Spain, with over US $220 billion in assets and a 13% market share.

The Gilinski group also owns Yupi, a snack food company in Latin America, and exports to nine countries. Gilinski Group also owns Rimax Plastics, which was founded by his father Isaac Gilinski.”

CIBC stated in a press release that GNB has purchased 66.73 percent of the shares in CIBC’s Caribbean entity, FirstCaribbean International Bank Limited. CIBC controls 24.9 percent, while the remaining 8.37 percent is in the hands of minority shareholders.

“FirstCaribbean is a strong, well-performing business that continues to grow across the region. FirstCaribbean remains laser focused on delivering on its strategy – providing its clients with first class service through a modern everyday banking experience and providing its employees with the best possible work experience,” FirstCaribbean CEO Colette Delaney said in the press statement.

“FirstCaribbean will remain the strong entity it is today, committed to servicing its clients in the region,” Gilinski stated. “I have been impressed by the strength and stability of FirstCaribbean and am excited about its prospects for the future.”

FirstCaribbean is one of the largest regionally listed financial services institutions in the English and Dutch speaking Caribbean, with US$11.5 billion in assets and market capitalization of US$2.1 billion, as at July 31, 2019. FirstCaribbean also has a representative office in Hong Kong providing business development, relationship management and fund administration.