The GraceKennedy group continues to declare its intention to stand firmly behind its First Global Bank (FGB), but chairman Douglas Orane has stopped short of any comment on the level of cash injection, which financial sources say is likely to be required in the face of the $1.6 billion loss to rogue trading reported by FGB last week.

"GraceKennedy and the preference shares holder, the IFC (International Financial Corporation), stand firmly behind the bank," Orane told Wednesday Business last night, but declined to say how this would translate into financial support.

However, there has been talk in financial circles this week that the Grace boss has remained locked in discussions with Bank of Jamaica (BOJ) governor, Derek Latibeau-diere, and other senior BOJ regulators about shoring up the bank's finances. Sources say a decision could be be announced as early as next week.

Central bank officials were not available for comment, but there was speculation in the market yesterday that a deal was in the making.

"One would expect that Grace would pump perhaps a billion dollars or somewhere close to that amount into First Global to satisfy the BOJ," said one market analyst, who preferred not to be named because of the sensitivity of the issue. "Grace has the cash to support the bank and Douglas Orane has been making that clear to anyone who would listen."

Unauthorised bond trades

Indeed, in its recent half-year financials, Grace reported cash on deposit net of overdraft commitments of $8.85 billion. Its gross cash was $10.87 billion.

GraceKennedy may find itself having to put some of that cash on the line after it was revealed last week that at least one senior First Global official had in a series of unauthorised bond trades, going back to January of this year, lost US$19 million - J$1.6 billion or 40 per cent of its net-free capital of just over $4 billion.

Trades hidden

Wray

The trades were hidden and were not discovered for several months until unearthed by an internal audit last week.

The bank's head of treasury and at least three other executives have either resigned or have been fired, and question marks remained over the future of First Global's CEO, Wayne Wray.

Orane last night declined to be drawn into speculation about Wray's job, preferring to say that "additional steps are being taken to ensure more robust internal controls".

His consistent refrain is that despite what is obviously a major hiccup, First global remains stable and able to meet its commitments.

"The bank continues to run smoothly and is able to meet the needs of its depositors," Orane told Wednesday Business.

business@gleanerjm.com