In Barbados: FCIB Educates Customers On Managing Risk

18 October 2011


A key topic amidst all this volatility, FCIB shares its views on risk management at Commodity Derivatives luncheon.

During these challenging times, FirstCaribbean International Bank (Barbados) Limited (FCIB) has decided to present forums to educate customers, such as manufacturers, on ways of reducing electricity bills.

At a Commodity Derivatives Client presentation luncheon at the Hilton yesterday, FCIB Managing Director, Danny Farmer, told the Barbados Advocate, “On the commodity side, when it comes to oil and gas, persons enquire that they don’t actually import oil and gas, [rather] the Government does for the country, so how do [they] hedge that exposure?

“We have a lot of manufacturers that have been speaking to us about electrical bills increasing because there is this
pass-through with the fuel clause, therefore if prices raise or decrease the electricity bill fluctuates.”

He explained, “What we have been doing for the larger manufacturer is presenting a hedging opportunity to hedge the price of oil. We try to find a way to determine how much is your actual usage over the year based on your clause, [so] that we can see how much you have used over the year and we try to find a hedging programme that meets your requirements to hedge the risk of oil prices going up.”

Yesterday’s presentation featured key speakers from CIBC to educate both staff and customers about derivatives and what it is all about.

Farmer indicated, “A lot of people are not familiar with derivatives and sometimes hear the word and don’t have a clue of what it is. It is not new products and services, but more awareness of how they can be used to mitigate risk to commodity prices, interest rate risk or foreign exchange.

“We are trying to educate customers about how to manage risk or what tools you can use to manage those risks. Derivatives is one of those tools you can use to manage those risks to these exposures,” he pointed out.

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