A second chance for First Citizens

THE ANNOUNCED sale of ten million shares of First Citizens is an opportunity for this banking entity to conclusively demonstrate that it has moved on from the controversy surrounding its 2013 initial public offering (IPO).

For sure, the issues that arose relating to that IPO did the bank no favours in the eyes of the public and served to shine a spotlight on the need for practices within the corporate world to be as much scrutinised as elsewhere, especially when citizens, state entities and state policymaking are involved.

What happens at companies like First Citizens Group Financial Holdings sets the tone elsewhere and is of direct concern to citizens, as implied by the company’s name. The Government is banking on the divestment of these ten million shares to raise about $550 million.

The context of the sale, which will close next month, could not be more different from the circumstances of 2013.

Back then, the country’s economy was looking forward to the resumption of higher levels of gas revenues. The later fall in petrochemical prices, which resulted in widespread cutbacks in state expenditure, was only in its initial stages.

And the pandemic had yet to occur, exacerbating the income divide in the country.

Of course, it was always the case that there was a need for proper standards and rules to be followed and for the state to ensure the widest possible share ownership (previous scandals in relation to share transactions relating to state companies such as the Home Mortgage Bank had underlined as much).

But at this moment in our country’s history, there is a particular onus on First Citizens to get this right. Many onlookers will already be asking who this exercise is meant to, and will, benefit more: those who can afford to acquire shares? Or the citizens who stand to gain from the bank's raising revenue more generally?

A recent proposal for a greater tax burden on the rich set off a firestorm of commentary, with many describing the remark as socialist and disagreeing with it. But globally, such proposals have long been a part of political and state policy discourse, such as US president Joe Biden’s proposed billionaire tax.

The ongoing efforts to “restructure” state entities such as TSTT and to divest the assets of Petrotrin raise complex questions about the State’s ethos when it comes to private-sector involvement in key resources, as opposed to government involvement in big business.

The First Citizens sale should also be seen within this prism, raising, as it does, the question of ultimate ownership.

The bank this week also announced it is in negotiations with an affiliate of the Inter-American Development Bank for multi-million-dollar financing meant to provide loans and mortgage solutions for ordinary citizens and small businesses and to develop technology.

Such talks point to the potential for state finance entities to play a greater role in jump-starting the economy and in aiding in economic diversification. The importance of this role underlines just why all eyes will be on this sale.