Cabinet approves $4.8b Clico Trust

Cabinet has approved the establishment of the Clico Investment Trust which will have 51.9 million shares belonging to Republic Bank. Acting Prime Minister Winston Dookeran made the announcement at the post-Cabinet news briefing yesterday at the Office of the Prime Minister, St Clair. He said the transfer of the shares represented a market value of approximately $4.8 billion. He said the decision brought a closure to “the policyholders’ situation regarding Clico” and described it as a “special mechanism.”

 

Dookeran said the Clico financial crisis was a main hurdle which was ten per cent of T&T’s GDP and 17 per cent of the Caribbean. He said: “Therefore, it was indeed a major hurdle that had to be dealt with in order to ensure that there were three objectives to be achieved.

“One, is that we do honour the policyholders’ claim and in so doing ensure the financial stability of the sector;

 

“two, was that we had to put into place measures that would give the whole Clico an opportunity to regain its strength and to rebuild its role as a major financial institution in the country; and

 

“thirdly, we had to take appropriate steps in order to deal with the orderly transfer of responsibility from CL Financial to the Ggovernment in due course.”

 

He said the first stage of the process was the $75,000 payout to policyholders while the second stage was the issuing of bonds to those who had in excess of $75,000 in deposits. He said: “Those policyholders, who will be issued bonds of 11 to 20 years’ duration, will now have access to this trust to purchase units equivalent to their value of their deposit during that period of 11 to 20 years. “We anticipate that the total value of such obligations is in the order of $5.2 billion and if they were all to take up this offer, the Government will still have to add a further $400 million to the trust in order to have it fully capitalised to do this transaction.” Dookeran, who is Finance Minister, said Government was hoping to have the issue resolved within the first quarter of this year. 

 

He said depositors would have two options: Either keep their shares and reap the benefits of dividends or trade the shares.

He said more details would be provided at a later date. Dookeran added: “This is the final step in terms of the model that has been put into place and has been working so far with great success. “It has had the ability to ensure that the debt burden of Trinidad and Tobago is well within the thresholds that are internationally accepted and now we move on to the second stage which is to rebuild the new Clico in order to ensure  we have not lost all in this debacle that occurred in this country over the last few years.”