Barclays Bank's nearly century-long retail banking relationship with the Caribbean, is about to come to an end.

That is because CIBC and Barclays have finalised a deal which will see CIBC acquire Barclays' 43.7 per cent ownership stake in FirstCaribbean International Bank.

According to a Press release issued yesterday, the transaction is expected to be completed by year-end and will give CIBC 87.4 per cent ownership in FirstCaribbean, with the remaining shares held by regional investors.

CIBC will pay Barclays $3.24 for each FirstCaribbean share for a total price of about $2.16 billion.

In keeping with regional laws covering take-over bids, CIBC will now have to offer to buy the shares of all FirstCaribbean shareholders.

Promptly after the close of the transaction, CIBC will make the mandatory offer to all shareholders at the same price of $3.24 per share, according to the Press statement.

At the close of trade on Wednesday, FirstCaribbean's shares were selling at $4 each on the regular market of the Barbados Stock Exchange.

Under the structure of the transaction, Barclays will first sell 90 per cent of its holding initially and CIBC potentially acquiring, at Barclays' option, the balance in its subsequent mandatory tender offer.

CIBC will then pay an additional sum to Barclays, as well as the other shareholders who tender their shares to this offer, to reflect dividends in respect of their period of ownership prior to closing.

In commenting on the transaction, FirstCaribbean's chief executive officer Charles Pink said: "FirstCaribbean continues to believe that having a major global bank like CIBC as controlling shareholder will be a very positive step for our company. We are delighted that with this definitive agreement we are well on our way to concluding the transaction."

CIBC's president and CEO, Gerry McCaughey, said: "We look forward to working with the management and employees of FirstCaribbean to build on the excellent foundation they have created since this bank was established nearly four years ago."

Naguib Kheraj, group finance director of Barclays PLC stated: "This transaction leaves FirstCaribbean well positioned for its future development.

"While the combination of Barclays and CIBC's Caribbean retail banking assets created value for all stakeholders, the future strategy of FirstCaribbean is now best pursued with one controlling shareholder." (CH/PR)