Clico Investment Bank Failure


titanic

Could the failure of the Trinidad and Tobago conglomerate  CL Financial, the largest financial group in the Caribbean, be the tip of the financial crisis in Trinidad and Tobago and the Caribbean?  Is the financial Titanic about to hit? If citizens are asking what the country would be getting for the multibillion dollar Government bailout of CL the answer would be a financial system which has not collapsed. If people are asking why no beefed-up laws were passed to regulate CL Financial when the Central Bank became concerned about their high risk ventures since 2004, the answer would be who knows.

The worst thing a financial institution and system could experience is a run. No financial system could endure a run by its depositors for very long since runs are to banks what silver bullets are to werewolves. Financial systems survive on confidence and the lack of confidence can move from one institution to the next easily like a forest fire in the wind.  In the financial world the strong usually pays for the sins of the weak. As ludicrous as it seems right now, the best thing the public could do is be concerned but party. People should leave the financial institutions alone and let the regulators do what has to be done. This is one time where don’t worry be happy might work. The other banks in Trinidad and Tobago are stable and we were told the others never went into those high-risk ventures that CL Financial was prone to undertake. The problem with high-risk financial institutions is that most of the people who invested in them were ignorant to how high risk the ventures were and made the decision to invest based on a glossy brochure an/or an insurance agent – the two least credible sources of the truth.

For Trinidad and Tobago’s and the Caribbean’s sake I hope the valuable assets of CL Financial prove to be valuable. Maybe this is the right time for cash-rich China to step in and acquire a part of Trinidad and Tobago at fire sale prices. Or maybe they will wait for it to burn a little bit more.

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15 thoughts on “Clico Investment Bank Failure

  1. I still have questions about this whole CL issue… they are going to close/shut down CIB and still retain other assets… but some of the effects came from the plummeting price of Methanol… not my words but the Gov. CBTT… from ‘800’ to ’80’…

    I know that this industrial sector was seeing a slow down but doesn’t this sector still account for most of our GDP? doesn’t it also employ thousands of ppl?

    this ‘deal’ doesnt satisfy me… what if FCB goes belly up? they are the Gov’t Bank!

  2. It doesn’t satisfy anybody but all that people can hope for is no run on any institution , including CIB. Theses things have a way of cascading and the Central Bank is rightfully trying to throw water on the fire. I somehow don’t see current methanol prices as the main factor in CIB’s problems. I think there was a run by some big investors when certain investments failed to produce an acceptable rate of return, or any rate of return. As Duprey said, fear (lack of confidence) caused this run. People are jittery and the more people see financial institutions fail the more likely they are to withdraw their investments. When will world confidence rise is anybody’s guess. I am not sure what happened to all the windfall profits made during the methanol boom but apparently it wasn’t enough.

  3. Obviously you have not done your research. How many Chinese Fast Food Rest are there in TT now ?
    If CL financial made bad calls all u have 2 do is look at d world experiences at present. I commend Mr Duprey and his empire. If dey fall many would , not only in TT but many more. Any how dis is d test , to test the weak at heart. I can assure CL Fin group would need to help the gov of TT in the very near future

  4. Scene 🙂 🙂 At least you are doing your part in propping up the financial system 🙂

    DR ANTHONY AMEERAL, I know what you mean but those fast food joints are just nibbles. Now they have a chance for a big bite just like Alutrint was/is. I am not blaming Duprey for anything and admire the man still. But I think high-risk has its consequences, not all good though. As the CB Governor said, it’s all preemptive.

  5. wait around and soon the domino effect will become faster, any one can sell you ppl snow belive keep the faith dont panic what a prayer session my friends!

  6. Pingback: Global Voices Online » Trinidad & Tobago: The Bailouts Begin

  7. Don’t be neive to the failing systems around the world. Just because we don’t hear much about the rest of the world doesn’t mean we are in good shape. Remember what the US are doing with the stimulous plan….and remember what our government is doing with our ” stimulous plan”…if we even have a plan. We as trinidadians do not have a plan of what is tomorrow. We live day to day because even if I had a plan for tomorrow, the other guy next to me doesn’t, so no man is an island, as I have to work with him. CL Financial knew the risks just as we all did, and with great risks comes great responsibility. The Central Bank’s responsibility is to keep afloat a sinking ship. The damage has already been done, what do you think we should do? Try and patch a 10 billion US dollar hole, when our crime is rising, and income is falling? Do you think we should spend our foreign exchange reserve that keeps our currency stable, in keeping something afloat when the men in charge knew it would sink if they didn’t pull out(which they didn’t)?What do you think would happen to our currency when the Obama plan puts in effect? Don’t be nieve, as we can no longer be self sufficient…CARONI not here any more….we import sugar, flour, meat, oil, even cigarettes……Do you really believe the “small man” can survive on 1000TT a month in government aid? Come on people, wise up and realize that we are heading for failure because we failed to prepare. Last of all, I do have to say to the DOC who spoke about chinese food – stop buying it, because maybe you can afford better, but most of us can’t.

  8. All I want to know like all other small man having invested in 8yr plans with $100 – $500 monthly installment : SHOULD WE CONTINUE OR NOT???

  9. Pingback: Financial Inspector Carl Hiralal too cosy with bankers he’s supposed to supervise « Barbados Free Press

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