Imbert defends HSF, Guardian Holdings, NCB bank: ‘All are in good financial shape’

Business

Ryan Hamilton-Davis

8 Hrs Ago

DISMISSING allegations by Opposition Leader Kamla Persad-Bissessar that the Heritage and Stabilisation Fund (HSF) may have deposits in NCB Jamaica, or any of its affiliates, because of a vested interest in Guardian Holdings (Guardian Group) as a “flight of fancy”, Finance Minister Colm Imbert said the HSF is now in a better position than it was when the PNM came into power in 2015.

Speaking at a virtual press conference on Wednesday, the minister sought to debunk allegations that the HSF had lost close to US$1 billion.

In June the HSF reported a loss of US$913.5 million for 2022 for the first time since its establishment in 2007. Persad-Bissessar immediately took the Government to task, calling it negligent and incompetent.

Imbert confirmed the loss then but said as of June 9 the HSF recorded a net asset value of US$5.466 billion (TT$37.17 billion). He added in June that the fund had generated almost US$600 million.

He noted that 2022 was an extremely challenging year for market players and sovereign markets, given the volatile geopolitics, high inflation, rising interest rates and negative returns in stocks and bonds.

Global shocks rattled markets around the world, according to several reports. The Dow fell almost nine per cent, S&P fell by almost 20 per cent and UK stock funds lost about US$10 billion due to record high outflows from the funds.

But on Wednesday, Imbert said the HSF had grown by another US$300 million.

“I got some information from as recently as the 31st of July, and the net asset value of the HSF was US$5.6 billion, which is US$900 million (TT$6 billion) more than it was in 2022,” he said. “It is more than it was when we came into office in 2015, it has not lost a penny between last year and this year and it has recovered all of its value.”

HSF has no investments in NCB

Imbert said he went as far as to ask the Central Bank if the fund had any vested interest in NCB Jamaica, NCB Global Finance, Guardian Holdings, or any other affiliated company.

He got a response which said: “Central Bank has indicated that the HSF does not have investments in either NCB, NCG NCB Merchant Bank or any NCB entity, whatsoever, or Guardian Holdings or any other company associated with Guardian Holdings.”

“Not only does NGC have no investment in NCB or Guardian Holdings Ltd, but it is not allowed (to),” Imbert said. “I would think the Opposition Leader would know that.”

He also addressed claims that the Opposition Leader made against NCB on July 31, when, during a political meeting, she claimed NCB was under some form of financial distress, and it would have had some connection with the financial health of Guardian Holdings of which NCB has a controlling interest.

Imbert said, firstly, NCB is not a TT bank.

“It is not regulated by the Central Bank of TT,” he said. “The only NCB entity that operates in TT is NCB Merchant Bank, which is associated with less than one per cent of banking operations in TT. Therefore, it is impossible – even though Central Bank in consultation with other bodies in the Caribbean have confirmed that NCB Merchant Bank is in good shape – it still could not possibly cause a systemic collapse in the financial sector in TT.”

He continued by highlighting that Guardian Holdings had earned $1.13 billion in profit after tax in 2022.

He said in the first quarter of 2023, Guardian Holdings earned $62 million in profit after tax, and in the second quarter $253 million.

“So, for the first six months of this calendar year, Guardian Group has made a profit after tax of over $300 million.”

Imbert also petitioned the Central Bank, asking, should NCB really be in some financial trouble, would it affect TT’s economy because of its majority ownership of Guardian Holdings. He reported the Central Bank said while Guardian Holdings is an entity of NCB, they are separate legal entities. The Central Bank added in its response to Imbert that Guardian Holdings’ financial statements indicated a strong financial position.

“Most importantly all TT-regulated financial entities in the Guardian Holdings group which would include the insurance companies are ring-fenced with adequate capital,” he said. “So, Guardian is in excellent shape.”

Imbert shared further insight from Central Bank which said NCB simply has shares in Guardian Holdings.

“In the event that NCB fails these shares can be sold without affecting the soundness and safety of the Guardian Group,” he said.

‘There will never be an inheritance tax’

Imbert also responded to claims from Persad-Bissessar that Government is planning to impose a 25 per cent inheritance tax on TT citizens. He said it has not happened, and never will.

“As far back as June 14, I sent a press release making it crystal clear that this was ludicrous, fabricated, outrageous and that the leader of the Opposition was engaging in a flight of fantasy,” he said. “For those who wish to know there are taxation guides for countries around the world and in the inheritance tax guide for 2023, TT is not in there.”

“There will never be an inheritance tax in TT under this Government,” he said.

In the wake of the Opposition Leader’s remarks, last week, Guardian Holdings CEO Ian Chinapoo in an internal letter to staff assured the company is strong, well governed and with assured benefits being accrued for policyholders.

Persad-Bissessar had raised questions about eight financing transactions in 2020 valued at almost TT$3 billion for state entities won by NCB Global which was led by Energy Minister Stuart Young’s brother Angus Young, at the time. She questioned whether the connections between the companies could see a collapse similar to what happened at Clico (CL Financial group) which received a multi-billion-dollar bailout from the Patrick Manning administration in 2009.