Ky­ron Reg­is

ky­ron.reg­is@guardian.co.tt

The Unit Trust Cor­po­ra­tion will close its Bu­reau de Charge busi­ness come Au­gust.

At the Unit Trust Cor­po­ra­tion’s 2020 An­nu­al Gen­er­al Meet­ing (AGM), the com­pa­ny’s ex­ec­u­tive di­rec­tor, Nigel Ed­wards said: “Af­ter care­ful analy­sis, we have de­cid­ed to dis­con­tin­ue the op­er­a­tions of the Bu­reau de Change, ef­fec­tive 1st Au­gust 2020.”

The Bu­reau de Change, Ed­wards not­ed, was in­tro­duced in 1995, 25 years ago, as a way for unithold­ers to ac­cess for­eign ex­change, where its busi­ness is to pur­chase cash cur­ren­cy from mem­bers of the pub­lic and then that cash cur­ren­cy, could be sold back to oth­er mem­bers of the pub­lic.

He in­di­cat­ed that the re­al­i­ty of the for­eign ex­change mar­ket for UTC has been that, there is very lit­tle sup­ply of cash cur­ren­cy to be pur­chased and con­se­quent­ly, very lit­tle to make avail­able to the pub­lic.

Ed­wards al­so high­light­ed, that un­like the com­mer­cial banks, UTC is not a pri­ma­ry deal­er of for­eign cur­ren­cy, and is, there­fore, not in re­ceipt of an al­lo­ca­tion from the Cen­tral Bank of Trinidad and To­ba­go (CBTT). It’s sup­ply of USD is en­tire­ly de­pen­dent on what we pur­chase from cus­tomers, and buy from oth­er fi­nan­cial in­sti­tu­tions.

Cur­rent­ly, UTC op­er­ates nine Bu­reau de Change from each In­vest­ment Cen­tre lo­ca­tion, but it rep­re­sents less than one per cent of the cor­po­ra­tion’s busi­ness. “Most im­por­tant­ly,” Ed­wards, said, “the Bu­reau de Change is not aligned to our core busi­ness func­tion, which is, the cre­ation of wealth for our unithold­ers.”

Dur­ing a sub­se­quent Q&A ses­sion which was streamed on­line, Ed­wards in­di­cat­ed that no em­ploy­ees would be im­pact­ed from this de­ci­sion. He said that there are two UTC em­ploy­ees on av­er­age, per in­vest­ment cen­tre, who work with­in the Bu­reau de Change.

Ed­wards not­ed that those peo­ple, would be re-de­ployed in­to oth­er ar­eas. At the mo­ment, the Ex­ec­u­tive Di­rec­tor in­di­cat­ed that the Bu­reau de Change does not re­quire full time use of the em­ploy­ees, so they would be re­as­signed to func­tions that are more ser­vice ori­ent­ed.

The UTC ex­ec­u­tive di­rec­tor said that the cor­po­ra­tion has ap­plied on mul­ti­ple oc­ca­sions for a for­eign ex­change deal­ers li­cense, but was un­suc­cess­ful. Ad­di­tion­al­ly, the clo­sure of the Bu­reau de Change would not im­pact its US in­come funds, said Ed­wards.

For 2020, the UTC re­port­ed a loss of $45.8 mil­lion for Quar­ter 1 (Q1). Ed­wards said that the loss­es was made in the con­text of bear­ish fi­nan­cial mar­kets. He not­ed that he US mar­ket fell by 20 per cent in the first quar­ter of 2020, against the bull­ish ten years of con­sec­u­tive pos­i­tive re­sults while T&T’s stock mar­ket for Q1 2020, fell by some 11.5 per cent.

In Q1 of 2020, UTC al­so fo­cused on re­duc­ing op­er­at­ing ex­pens­es and re­duced ex­pens­es by $2 mil­lion from $70 mil­lion in 2019 to $68 mil­lion this year. It al­so in­creased its dis­tri­b­u­tion to unithold­ers by $16 mil­lion in 2019, up from $249 mil­lion in 2018 to $265 mil­lion; and so far this year, it in­creased its dis­tri­b­u­tion by $11 mil­lion from $43 mil­lion last year to $54 mil­lion in 2020. In 2019, the UTC’s To­tal In­come grew by $1 bil­lion from $0.3 bil­lion in 2018 to $1.3 bil­lion. In­clu­sive of all funds, UTC gen­er­at­ed a to­tal Net In­come of $1.1 bil­lion. In ad­di­tion, UTC record­ed an in­crease in To­tal Dis­tri­b­u­tions to Unithold­ers of $16 mil­lion to $265 mil­lion from $249.3 mil­lion in 2018.

The cor­po­ra­tion’s to­tal as­sets grew by 3.9 per cent, from $22 bil­lion in 2018 to $22.8 bil­lion and it re­tained a sig­nif­i­cant­ly en­hanced cash po­si­tion of $1.2 bil­lion from $2.1 bil­lion in 2018 to $3.3 bil­lion.

Ed­wards re­called that in 2019, UTC spoke about the po­ten­tial for volatile earn­ings from one pe­ri­od to the next. This was dri­ven pri­mar­i­ly by the new ac­count­ing stan­dard, IFRS 9, which re­quired fund is­suers to put changes in the fair val­ue of se­cu­ri­ties through the state­ment of con­sol­i­dat­ed in­come.