Financial Crime World

Trinidad and Tobago’s Financial System: A Complex Web of Conglomerates and Regional Linkages

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The financial system in Trinidad and Tobago is a complex web of conglomerates and regional linkages, according to a report released by the Central Bank of Trinidad and Tobago (CBTT).

Dominance of Conglomerates

A small number of conglomerates dominate the financial system, with two being regionally active banking and securities groups, one being a mixed activities group, and another being primarily a non-financial entity with banking and securities operations. These conglomerates have acquired an array of financial and non-financial subsidiaries throughout the Caribbean, operating as prominent lenders, direct investors, underwriters of regional securities, and asset managers.

Cross-Border Integration

The report notes that cross-border integration of the Trinidad and Tobago financial system is taking place rapidly. As of December 2004:

  • The banking system’s loans and investments abroad were spread over 20 countries.
  • A single local insurance company was conducting business in over 22 countries.

Regional Linkages

CARICOM countries account for 85 percent of TTO banks’ loans and investments abroad, while direct exposure of commercial banks to the region is low relative to capital. However, exposure of investment banks is substantially larger, thereby increasing overall exposure at the conglomerate level.

Securities Markets

Regional integration has also progressed through the securities markets:

  • Around 18 percent of new equity issues on the Trinidad and Tobago Stock Exchange (TTSE) are accounted for by cross-listings of CARICOM companies since 1997.
  • Growth of regional investments through collective investment schemes has been rapid, with around 30 percent of unit trusts in the TTO market being registered by local agents representing foreign issuers by the end of 2003.

Conclusion

The report concludes that Trinidad and Tobago’s financial system is characterized by a small number of conglomerates dominating the market, cross-border integration, and regional linkages. These trends are expected to continue shaping the country’s financial landscape in the future.

Key Statistics

  • A small number of conglomerates dominate the financial system
  • 85 percent of TTO banks’ loans and investments abroad are in CARICOM countries
  • Direct exposure of commercial banks to the region is low relative to capital
  • Exposure of investment banks is substantially larger, increasing overall exposure at the conglomerate level
  • Around 18 percent of new equity issues on the TTSE are by cross-listings of CARICOM companies since 1997
  • Around 30 percent of unit trusts in the TTO market are registered by local agents representing foreign issuers by the end of 2003