Maroc - NEWSDAY.CO.TT - A la Une - 18/Nov 09:40

Financing government projects danger

THE EDITOR: I am concerned about the chairman’s statement that FCB is ready to provide financing for government projects. While supporting national infrastructure is important, such a strong stance risks compromising the bank’s financial health, if projects do not generate sufficient returns. This can lead to a decrease in profitability, potential impairments, and, ultimately, lowered share prices. Shareholders are likely to be wary of investments that appear to prioritise political or strategic objectives over sound financial management. If profits decline, investors may withdraw their funds, seeking safer alternatives elsewhere. We may see a shift of investments to more stable, profit-oriented institutions, especially if government influence continues to grow as it appoints board members in institutions like Republic Financial Holdings Ltd, potentially in December. This pattern of potential or possible government influence risks creating a cycle where banks and other financial institutions may become less driven by commercial prudence and more by political directives, possibly leading to a loss of confidence among investors and a reduction in the banking sector’s overall stability. Ultimately, while supporting government initiatives is crucial for national development, maintaining the financial integrity and independence of banks and other financial institutions are equally important. Proper governance, transparent project selection, and adhering to sound banking principles must be prioritised to protect shareholder interests and ensure long-term economic stability. GORDON LAUGHLIN via e-mail The post Financing government projects danger appeared first on Trinidad and Tobago Newsday.