One of the most important functions of a publicly traded financial institution is to give due care to its fiduciary duty to its shareholders.

In other words, management of these institutions must ensure that their shareholders are happy, at least reasonably so, and that they are being taken care of. After all, they became public because they sought support through initial public offerings (IPOs) to get the necessary capital to expand and grow.

One of the ways in which they ensure that their shareholders remain committed to their investments in the company is the timely payment of dividends. Even if the stock is not doing so well and much capital gains are not being made, people want to know that they will get their dividends on a timely basis. Many depend on these dividends to supplement their income, particularly retired shareholders.

Under the cover of the COVID-19 pandemic, the financial authorities allowed financial institutions not to pay dividends. There was concern about capital depletion at a time when the economy was upended. NCB, along with others, took advantage of this and hence no dividends were paid to shareholders. In fact, the last time NCB paid dividends was in May 2021, over two years ago.

Now that the economy is not in dire straits as many had feared, people are clamouring for companies to resume dividend payments. NCB has been specifically fingered and the management was forced to respond. The bank’s major shareholder and chairman of NCB Financial Group, Michael Lee-Chin, who had taken a three-month leave of absence, shortened his leave. One consequence of his return was two top executives at the bank being immediately sent on leave, Patrick Hylton, the CEO, and his deputy, Dennis Cohen.

Under a restructured management team, with himself at the head, Lee-Chin gave certain assurances to the shareholders and, by extension, the people of Jamaica, that there would be changes at the institution, with a view to returning it to the financial vibrancy that people have come to expect. Top of the assurance given was the imminent resumption of dividend payments.

However, despite all these assurances, my instincts tell me that all is not necessarily well at the group. At the time of writing, the share price is hovering at an average of $75.00, with an average of about $70.00 for the past month. This is a tremendous fall from the dizzying heights it reached in the past, as I recall, as much as $250.00.

I am not suggesting that a stock price is the best litmus test of a healthy company, but it is often a statement of the confidence that investors repose in the institution. I find it concerning that the two main executives, who, as it has been widely acknowledged, brought great financial strength to the bank, building it into the highest capitalised financial conglomerate in Jamaica and a leading one in the region, could be so summarily removed from office. As we say in Jamaica, where there is smoke there is always fire. I wonder what fire raged under the leadership of these men that resulted in their sudden removal from the helm of power. After all, ostensibly, they are understood to have served well. What really went wrong?

By fair disclosure, I must indicate that I am a shareholder, albeit a small one, in NCB. I believe that we are entitled to more information than might have already been given to really convince us that all is well at the group. I have not met Lee-Chin in the flesh. He reminds me of a smiling emoji, full of optimism and determination. You cannot help but like the man. He is always oozing optimism and impressing you that he is a good businessman who knows what he is about. And he has a track record in the financial industry to prove this.

But it is going to take more than a smiling face to convince shareholders that all is well. As the new executive chairman of the bank, he might be happy to be back at the helm of the group, but investors continue to be unhappy about the lack of dividend payments for over two years. I think investors will be patient to watch the bank for the next quarter or two, but all hell will break loose if dividend payments are not resumed soon.

I believe Lee-Chin knows this, thus his pre-emptive strike against the ill-fated top executives. After all, as the major shareholder, he too has been denied dividend payments, but from the looks of it, his pockets are not as shallow as the ordinary shareholders in the group.

Great charm from a chairman, though helpful, does not greatly persuade anyone that the future will be brighter. Dividend payments are the mother’s milk of such persuasion, and the bank would be well advised to get its act together, be open to its shareholders and other investors, and take them more into its confidence.

The leadership of the group has its work cut out for it in the next two quarters to convince shareholders that all is well. We will be watching.

Dr Raulston Nembhard is a priest, social commentator, and author of the books Finding Peace in the Midst of Life’s Storms; The Self-esteem Guide to a Better Life; and Beyond Petulance: Republican Politics and the Future of America. Send comments to the Jamaica Observer or stead6655@aol.com.