A tribute to Philip Rochford

LARRY HOWAI

I NOTED with sadness the recent passing of a pioneer in the banking industry, Philip Rochford.

As I am currently travelling, I was unable to attend his funeral service, but I appreciate the opportunity to speak to the tremendous contribution that Rochford made to the financial services industry in TT.

The National Commercial Bank, of which he was the managing director, was formed in 1970, following the Black Power disturbances in the early part of that year.

Cyril Duprey, that pioneer of our local insurance industry who gave birth to Clico, was appointed as chairman and Rochford was appointed as the first managing director. Rochford’s mandate was to develop an institution that could rival the foreign banks, which until that time had a monopoly on the economy.

It was a time of much upheaval, as our nation had gained independence just eight years earlier and was now charting a way forward.

Rochford took on the challenge of building that bank and, by 1985, had nurtured it into one of the major financial institutions in the country, with a network of 23 branches and over 200,000 customers.

He also formed the first merchant bank in TT, the International Industrial Merchant Bank (a joint venture with Banque de Paris et de Pays Bas) and acquired 100 per cent of the shares of Trinfinance, a partly-owned subsidiary of Citibank.

These two initiatives gave a view of his vision to ensure that the financial services sector of the economy could play a positive and proactive role in the industrial development of the nation. He also acquired the branches of the Chase Manhattan Bank, which around that time had decided to pull out of TT.

His focus on development was not just on the physical expansion of the banking group that he had spearheaded but, very critically, on the growth of the people whom he saw as taking forward his vision for the future. He made a very significant investment in people. He transformed his training centre into a learning resource centre and made a significant investment in establishing its presence in Chaguanas.

I believe that he would say that his focus on the development of his people was his biggest success, and today several financial institutions and the nation as a whole are benefiting from that investment.

In 1986, the economy which had experienced the oil boom of the 1970s went into recession with the collapse of oil prices and, as businesses failed and government expenditure dried up, financial institutions became challenged.

The non-bank financial houses (such as SWAIT, Summit Finance and a number of others) fell first and the local/indigenous banks also faced challenges – the indigenous banks being the Trinidad Cooperative Bank (TCB), which was formed by locals in 1914, and the Workers Bank (WB), which was formed by an intervention by then prime minister Dr Eric Williams in 1970.

In that same year the National Commercial Bank was formed when the assets of the Bank of London and Montreal (BOLAM) were localised by the acquisition of the shares of the bank by the government.

The downturn in the economy in the late 1980s significantly impacted lower income and small and medium enterprises, which were the mainstay of the customer base of the local banks. These entities in turn had difficulty meeting their commitments to the banks.

In 1993, the Central Bank decided to intervene and "force" a merger of the three banks (TCB, WB and NCB). Thus, First Citizens Bank was formed.

The merger triggered a cacophony of criticism around the "failure" of the three banks, and that was accompanied by a general allegation that “locals were incompetent and incapable of managing a financial institution.” Rochford, as the leader of the largest part of this merger (NCB), and who was at that time approaching retirement, did not escape criticism, and he left carrying the brunt of the failure.

But our experience in this regard was not unique.

Banks are very risky institutions, as demonstrated during the Latin American debt crisis of the late 1970s, the savings and loan "scandals" and the Continental Illinois debacle of the 1980s in the US, the Asian financial crisis of the late 1990s and, of course, the financial crisis of 2009-2011 in the developed countries when banks from Europe, the UK and the US experienced severe crisis and several, such as Lehman Bros, Bear Stearns and many others, failed.

Between 2009-2011, 389 banks failed in the US, these including some large money centre banks, which only survived because of the Federal Reserve stepping in to force/facilitate bank mergers (similar to the action taken by our Central Bank in 1993). BankAmerica Corp, for example, was merged with Nations Bank. (Although Nations Bank was the surviving entity, it adopted the better known Bank of America marque.)

It is unfortunate that what the country saw with First Citizens was the "failure" of the three banks and not the positive aspects of what had been built by Rochford (and others who have since passed on, including veterans such as Ganace Ramdial at the Trinidad Cooperative Bank) and what had led to the future success of First Citizens.

As CEO during the early years after the formation of the new bank, I understood clearly that the rapid rise of the institution had much to do with the foundation laid by Rochford – the customer base that he had built, the branch network that had been created, and, most importantly, the cadre of trained staff that had been developed by Rochford during his tenure – all accomplishments for which he received little credit.

He has now passed on, but we stood on his shoulders and the shoulders of those who went before. It is for the new generation of bankers (and indeed the nation as a whole) to continue that process of building which is a responsibility owed to the new generation to come.

May he rest in peace.

Larry Howai is a former CEO of First Citizens Bank and a former TT minister of finance