CNB reveals directors’ gains in bank sale

| 09/10/2018 | 71 Comments
Cayman National Bank, Cayman News Service

Clarence Flowers (left) and Truman Bodden

(CNS): A circular released to Cayman National Bank shareholders on Friday, ahead of the general meeting tomorrow evening, about the bank’s takeover by a regional financial corporation revealed what the directors on the board, the majority of which have recommended that shareholders accept the sale, will gain. Former politician Truman Bodden has the largest number of shares among the individual directors, with 1,125,135.

According to the document he has agreed to sell 1.1 million of them in the deal, which will see the lawyer realise almost $7 million from his investment.

Clarence Flowers has over 47,000 shares in the bank and his family’s estate holds more than 1.3 million, but he and the family have not agreed to sell any shares.

In accordance with regulations, the bank is obliged to publish the holdings of relevant Cayman National shares in which the directors are directly or indirectly interested and what they intend to do with them now that the proposed sale to Republic Bank Trinidad and Tobago (Barbados) Limited has advanced to the point where it will be put to a vote of shareholders.

Stuart Dack, the bank’s president, holds 21,031 shares and plans to sell off 20,000; Sherri Bodden-Cowan also plans to sell 120,000 of her 125,639 shares; Bryan Hunter will be divesting 60,000 of his 69,338; and Nigel Wardle has agreed to sell 60,000 of his 65,479. Each of the directors is retaining well over the 999 shares required to keep their seats on the board.

According to the latest quarterly report from June this year, there are around another 40 million shares in the bank held by non directors and the sale requires between 50% and 75% of them to be sold in the deal.

The directors have recommended the sale in the absence of any superior offering, based on a number of issues but largely on the premium that shareholders will receive. On the day before the unsolicited offer in mid-September CNB shares were valued at $3 but Republic is offering $6.25 per share for the sale. This price is, according to the board, higher than the price at which the shares have traded for at least ten years.

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Category: Banking, Business

Comments (71)

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  1. Anonymous says:

    Did not know that the parent company of the bank buying out CNB was in liquidation and is now 51% owned by the Trini government. So another foreign government is trying to and has grabbed a piece of the Cayman pie. Thanks CIG for letting it happen.

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    • Bluff Patrol says:

      This is a commercial deal. Blaming CI government on the basis of protecting CNB’s sovereignty is ill-conceived.

      CNB is a private enterprise.

      • Anonymous says:

        Doesn’t the deal need the CI Government’s approval in order to go through? They can stop it. CNB will go the way of the other banks in Cayman who are now run by other Caribbean entities – ant names come to mind?

  2. Anonymous says:

    When you talk about a bank, money is the only thing.

  3. Anonymous says:

    Doesn’t matter. Cash is cash.

  4. Anonymous says:

    Why expect the shareholders to solve your government problems?

  5. Anonymous says:

    Republic almost went out of business in 2009. It’s parent company went bankrupt. Bailed out by Trini gov who now owns majority of shares. You can take their money for your shares, but you would be crazy to be a minority shareholder with them.

  6. Anonymous says:

    Republic Bank (TT) is a very well run corporation, a long history of making profit and contributing to the communities they serve. The major shareholders in CNB are all Caymanians, they are recommending a sale. They are not stupid! Banking is becoming more difficult day by day size and scale matters and it is a good deal for both entities. Now people who essentially have no equity in the bank are expressing negative vibes based on a false sense of national pride. Well done, wave your flag and get over it.

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  7. Anonymous says:

    CNB isn’t a charity. I don’t get all this fawning over them. Who do you think they make their money off?

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  8. Raymond says:

    Lest we forget that Shareholders who have patiently waited, even during times after storm and share price drop, to get a RETURN ON INVESTMENT. (OVER 40 years in some cases). Had it not been for those early Shareholders, including some of the Current Board of Directors, CNB would never have been formed and where would you be Today? Where would Cayman Islands be TODAY? How quickly some people forget or never looked at it in a reasonable way. Don’t forget the Government got shares in a Negotiated Settlement after the storm. Had it not done so, and able to recuperate the Losses, the Government would be broke as well and the Cayman Islands would be back to where it was in the 60’s and 70’s. I personally don’t think anyone would want to see those “Good Old Days” again!
    Would there have been the development in Real Estate, local Businesses, etc had there not been a Local Bank to help Fund the growth? It is sad but Some people can’t see the Forest for the Trees!

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  9. Anonymous says:

    We need Dart to swoop in and take it over!!!!! Yay!!

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    • Anonymous says:

      You know it’s really sad when there is so much talk about a local institution without a keen look at whether it has been managed by knowledgeable people at the very top and whether it has been as profitable as it should have been given the high level of resources available. Yes indeed many mortgages were given during the past 40 years and yes they have hired a large number of Caymanians, however, have they provided real value to the shareholders. Look at the price theDirectors are willing to sell at, peanuts for a bank it’s size and the cash it holds. A bank that makes trite profits only during rising interest rates only is not a well managed Bank., a lot of mortgage offerings and to hell with interest paid to the depositors.

      Observers of the local Banking industry privately comment On the top management neither of which have actually earned their keep during a 15 year period of proving that they are not capable, and a Board who continually let them reap the fruit of the farm with increased raises for doing what ? running the profitability margins into the ground save rising rates. They have accomplished nothing of worth, rather they have created failed ventures at a great cost, and paid substantial fines for lack of proper governance in some instances. One comment that sticks out is that of the flying Czar I wonder what they really mean by this.

      All in all there are some serious questions as to whether the Bank could potentially grow its profitability with its present top management and their lack of vision and adequate skills in today’s market place. Who knows maybe the Board finally woke up and saw the “Light”., perhaps the CNB many have grown to love does need a shake up, to provide a higher intrinsic value to the shareholders and to its customers. It is hoped that whatever obtains in the end, it will be of a great benefit to all concerned.

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    • Anonymous says:

      At least Ken Dart is a Caymanian, has been here over 20 years and employs many of us and treats us well. Just tired of hearing people talk negative about him, he can’t buy what people aren’t willing to sell. Kmt

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  10. Anonymous says:

    Let’s open a new bank, call it First Cayman Bank, we can let McKeeva run it…………..

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    • Anonymous says:

      Anyonelse wondering why would anybody pay double the price for anything……?

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      • Anonymous says:

        anything to ensure the minority of Caymanians are made to feel even more uneasy, unwanted and discouraged. The West Indians have convinced the ‘fool fool’ Caymanians that the ‘British’ need to go but only to be filled by them with their greed and no accountability.

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  11. Anonymous says:

    Good for the shareholders. Unfortunately, most of them cannot see beyond their nose. I hope the government is ready for the increase in unemployment once the dust settles and the new culture sink its teeth in. Today’s money in pocket is only in short term and many of the staff shareholders that sold, will become a burden on tomorrow’s generation.

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  12. Anonymous says:

    Let all Caymanians yank their money out of this bank.
    Let honest Caymanians create a new bank.
    Let’s keep the wealth local.

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    • Anonymous says:

      Let’s call the bank, Cayman Islands Bank. Done. Simples. I am in

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      • Anonymous says:

        If only the Cayman Islands Monetary Authority would allow more Class A banks, we would have much more competition, including a Cayman owned bank. This is the downside of the increase of regulation we’re facing.

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        • Anonymous says:

          I am sure CIMA is open to more Class A banks. Remember when McKeeva upped the Class A Licence fee from CI$200K to CI$500K, not really a move that encourages competition.

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        • Chris Johnson says:

          Do you have a short memory? First Cayman Bank had a class A licence and look what happened there. By the way the auditors heavily qualified their report and what did CIMA do? Zilch. That was the same with Interbank owned by Doucet who went to jail.

          We need no more opportunities for residents to lose their money.

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          • Anonymous says:

            So based on your comments mr. Johnson and your vast amount experience in the financial industry, are you saying CIMA is just a farce and the big salary that most of them make is a waste of money?

            • Anonymous says:

              Pretty much true.

            • Chris Johnson says:

              I am saying that CIMA and its predecessor the Inspector of Banks in earlier years ignored huge red flags on banks and CIMA later on hedge funds. They took no notice of seriously qualified audit reports and on two,occasions failed to listen to what I told them in meetings. On those occasions the banks went into liquidation within eighteen months. I am sure there is improvement but now I worry about the audit firms who have had enormous lawsuits filed against them and we are talking about hundreds of millions. Then of course are the many directors of hedge funds who cannot be sued for negligence because they are indemnified by the companies they serve. It is time for a change in the law here.

              If Cayman is to see more class A banks then they need to be substantial international banks. No more Gulf Banks or First Cayman Banks.

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    • Very Concerned says:

      I love this idea. Let’s do it!! A run on the bank’s deposit would put a serious nail in this deal!! Do it for Cayman.

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    • Silva Foxx says:

      Or a Credit Union for Caymanian’s only

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  13. Anonymous says:

    A very good thing to read if you haven’t yet. CNS, you ladies should add this to your archives if you haven’t yet.

    https://www.csx.ky/companies/announcement.asp?Id=6944

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  14. Anonymous says:

    Perhaps a good time to introduce a capital gains tax for companies bailed out by earlier government action, with perhaps the money gain specifically going to local education?

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    • Jotnar says:

      You understand that they bailed out the subsidiary of the bank, not the bank itself? That the bank could have let the insurance company collapse with no impact to itself, but with significant impact to Caymanian policy holders, which the government decided to avoid by directly bailing out the insurance company (and taking shares in it in exchange)? Or do you not understand that a parent company is not, in the absence of guarantees, responsible for the debts of its subsidiary. Just because a company owns another company does not mean its responsible for all its debts, and if the government decides to bail out a failed entity it cannot simply tax the parent to make up for it.

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      • Anonymous says:

        you missed the point where the banks mortgages were protect by said insurance. not too much people paying on a destroyed house by a policy sold by said bank.

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      • Anonymous says:

        Yes it can decide to simply tax as described. It can tax who it wants. Your rather simplistic analysis mixes up legal liability with fiscal opportunity.

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  15. Anonymous says:

    If everybody wants to sell, won’t the price decrease drastically?

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    • Anonymous says:

      Not immediately. They have a conditional offer on the table. Anyone wishing to sell gets the price, but only if enough of them agree otherwise its no sale.

      what is happening to the share price is, in simplified numbers:

      Share price = $3
      Offer of $6.25 per share made by Republic Bank
      Share prices climb to $5 as new people buy shares, driving up the price, on the assumption that they can sell them at $6.25 to Republic Bank
      Offer of $6.25 per share remains (and can now be executed, so the share price might even go up a bit more).

      Two scenerios
      a) enough people are willing to sell, purchases occur at $6.25 per share for everyone voluntarily selling to Republic Bank
      b) not enough people willing to sell, so the purchase does not occur, no one sells any shares to Republic Bank at $6.25

      Whatever happens the shares will probably begin to sink in value again, settling back down to $3-$4 per share as investors watch what happens with the bank and decide if they want to sell/buy remaining shares or not on the open market. – However this last paragraph is just my uninformed assumption that there isn’t much market demand for a small island bank with unchanged business fundamentals.

  16. Anonymous says:

    Had I known Truman was profiting all along from my banking being done with CNB I would have pulled my millions long ago.

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    • Anonymous says:

      If you have millions wouldn’t you know that he does too and one of the sources was this shareholding?

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  17. Employee says:

    I for one also have voted to sell, now I don’t have as many shares as the directors but as an employee of the bank soon hitting retirement age, I will be forced to retire with a small pay off, my shares have doubled, so why not sell.
    We must remember that the bank only has the name of Cayman in it, it was founded by expats, most of them from Miami.
    This sale is just like any other bank or company sale, let’s use the CUC sale many years ago, the majority of the shares owned by a Caymanian, and Caymanian shareholders. No one was really up in arms about this, nor when cable and wireless sold.
    The main reason this trini bank wants to buy CNB is for its credit card business, this trini bank is the largest credit card company in the Caribbean so why not expand.
    I’m now a happy employee, doubled my retirement fund.

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    • Anonymous says:

      You are a smart employee. I am a former employee and I am gonna sell.

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      • Anonymous says:

        Enjoy your pieces of silver.

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        • Jotnar says:

          He’s selling shares in a company like any other, not a piece of Seven Mile Beach – although no one seems to have an issue with the sale of the very land under our feet.

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    • Sucka Free Cayman says:

      Did tru tru hold your hand when you wrote this or did the trinidadians promise you a trip to Miami . Yes and the NAU will supplement the rest nah ?? Yes you looser first all it was the same type of wutless Caymanians like who sold out CUC We never own C&W you idiot that was a UK company founded by John Pender in 1852. Mann you fool bad, its just this level of ignorance why Cayman is in this mess today. Next you will getting on some talk show talking about yester year Cayman going back to the way we were.

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    • Disappointed Caymanian says:

      You are a SELFISH employee, who was paid a good salary with many perks. Your information about the founders of the bank is also TOTALLY incorrect. The founding members included ONLY TWO names from overseas (Tampa not Miami): Jack Bierley and David Cossar.

      ALL of the others were Caymanians:

      Local businessmen who subscribed to the establishment of Cayman’s only ‘local’ bank were: Peter Tomkins, Benson O. Ebanks (Chairman), Truman M. Bodden (Secretary), Derek Wight, Lawrence Thompson, James M. Bodden, Richard E. Arch, Daniel ‘Mike’ Simmons, Graham Ebanks, Norberg Thompson, Arthur Hunter, Clarence Flowers, Snr., and Bruce Campbell.

      Those founding members wished for the bank to remain in majority Caymanian hands that’s why they included that important Article, that the shareholders now have to vote to REMOVE before the sale can take place legally.

      A run on the banks deposits would be the best way to BOYCOTT this sale and ‘fix’ Truman Bodden and his greedy friends.

      Bravo to Clarence Flowers, Jr. The new NATIONAL HERO in the Cayman Islands (at least in my view!)

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    • Anonymous says:

      It was mainly founded by expats, from UK I believe. Tomkins was founding partner and do hope his children still have shares

    • Employee says:

      I love the thumbs down. How many of you have worked at CNB as long as I have, hmm not many, if any of you.
      As I said above, I will be forced to retire in a few years aged 60yrs, yes I will get a payout, but not that much. Yes I have got dividends over the years but if I recall maybe $1500 max one year. When I sell my shares which had been valued at about 90k I will now double my money for retirement, I I wasn’t to vote to sell I would get a small dividend and shares only valued at the above.
      I would prefer to get my 180k either invest it and pay off my small mortgage owed to CNB, I’ll be alot better off.
      Who I feel very sorry for are the staff who have been with the bank for a mid to short period, who will be made redundant, beleive me this will happen but business is business.

      CNS and other news sites published the directors share values, it would be interesting to see who in the public has shares, I’m sure there’s a number of the original expats who started the bank have a large amount.

  18. Anonymous says:

    Well done Flowers family, and well done Truman. You have all earned the right to do as you see fit.

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  19. say it like it is says:

    Just as I said in my earlier comment, a self serving recommendation.What enquiries has the Board made of the purchaser as to how it is funding this acquisition?.

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  20. Anonymous says:

    Coming soon: a much larger lingerie shop.

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  21. Anonymous says:

    a few service fee hikes and the Republic will be swimming pretty.

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  22. One Voice says:

    Well I don’t have shares but I have a few dollars in CNB and I am withdrawing every dime. Here I came BOB or FCIBC. I am just not comfortable with any back carrying the name REPUBLIC. I don’t care how strong they are . I am just saying .

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  23. Anonymous says:

    We know have caymanians and paper-caymanians,and now a third type. The sell-out while acting like you are allegiant to cayman islands and are looking to buy property outside of Cayman. There you go, this whole “caymanian” thing is crap.

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    • Anonymous says:

      The last, if only ever “Caymanian” is about no longer be Caymanian because the board agreed to make a nice stack of cash while retaining their positions on the board of directors. Wait and see, before the ink is signed how many Caymanian managers will be displaced in favor of home office people. Such a sad state of affairs.

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  24. Anonymous says:

    the rich get richer and poor suffer….

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  25. Jotnar says:

    I guess the directors are not expecting to be around much longer, and know a sweet heart deal when they see one. One thing for sure – wouldn’t want to be a dissenting shareholder if these guys get more than 2/3rds –

    “If the [Republic Bank] acquires more than two-thirds of Cayman National Shares as a result of the Partial Offer, the [Republic Bank] will have the ability to pass a special resolution approving a statutory merger which may result in the compulsory acquisition of Shares held by minority shareholders, subject to certain conditions,” the directors’ circular states, warning, “In that situation, dissenting Shareholders would be entitled only to payment of the fair value of their Shares, which, at such time, may be higher or lower than the offer price of US$6.25 per Share.”

    Sell now, or take the risk that you will get forced to sell at $3 seems to be the message.

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    • Anonymous says:

      Once they have control why do you think they would bother spending more money on minority shares? The risk is that you are left to die on the vine with shares worth even less than $3. That’s what happened to the Gov when it invested in the insurance company.

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    • Anonymous says:

      The shares are actually valued higher now. According to the Compass the offer is now only $0.75 above the current value, as the trading price has increased since the offer was made.

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      • Jotnar says:

        Trading price is entirely parasitic on the offer price. How many shares do you think routinely changed hands before this offer, or how many would if the offer was withdrawn? What was the price 3 months ago, and what has changed to drive the price to 6?

        The very fact that the trading price is still 75 cents below the offer price tells you something. Think about it – in theory you can buy at 6 and sell to Republic at 6.75 – or Republic could buy at 6 instead of 6.75, but there are still shares on offer at 6. How does the market sustain that kind of discrepancy? Because people don’t honestly think that Republic will complete – that there is a significant risk that they will either not secure the minimum 50% or that the deal will fall through -AND that in that event the shares are not worth the $6.75 on offer. Even the prospect of “easy” money is not enough to tempt people to buy them at 6; not even Republic will buy them at 6 unless they are guaranteed control.

    • MM says:

      Or do not sell at all and use the leverage to negotiate at $7 per share – any company willing to pay more than double the current share value sounds desperate for the acquisition and the $6.25 offer is a “shut-up and sign”.

      Unless there is something more the Directors are not telling us; there is nothing for the Shareholders to lose if another entity is willing to pay double the current share value.

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    • Anonymous says:

      They are hoping the Caymanian shareholders hold out then they can compulsory buy the shares cheap. As much as I hate to say I agree with @10:02 to aid in the loss of the last “Caymanian” bank but yeah sell out and make the most of it else get short changed. The bank is going to be sold out from Caymanians anyway, may as well make some money off of it.

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    • Anonymous says:

      Jotnar, seems like they also saying that the share price is based on what they think, not on any scientific or market formula

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      • Anonymous says:

        This most likely won’t happen but it would be funny as hell as people dump their shares on the exchange, the price per share rises past the $6.50 offered and a bunch of people overseas see the opportunity and snatch up all these shares at a much higher price and then they get compulsory bought at $3 a share after. What a noise that would be.

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    • Anonymous says:

      I am a shareholder, albeit with MUCH less shares than the Directors but I am voting against this. Has anyone looked at what the countries associated with Republic Bank will stand to gain from this sale (having a solid Cayman institution as part of their conglomerate) and the effect on Cayman? The “warning” you refer to makes me wonder what’s really going on because if this is so wonderful then share value should rise, or at least be maintained. Or, could the value be inflated just for this merger? Greed is a very bad malady.

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    • Disappointed Caymanian says:

      Money isn’t everything you do-do. And Clarence Flowers, Jr. is not hurting. Sometimes you just have to take a STAND and hold your ground!!

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