Local court case threatens Republic Bank’s acquisition of Scotiabank

Dec 11, 2018 News

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A court battle between Republic Bank and Precision Woodworking Limited is threatening to spill over to the looming acquisition by the former of a number of Scotiabank operations in the Caribbean.
Yesterday, two persons associated with Precision, in an “Appeal to Shareholders and Directors of Republic Bank Limited”, published as an advertisement in Kaieteur News, hinted that they may consider sharing information of the case with the banking regulators in the Caribbean territories where Republic Bank is looking to take over.

In the ongoing court case, Precision Woodworking Limited (PWL) is claiming the procedures used by Republic Bank to take the company into receivership were not properly followed.
The advertisement was placed by former staffer Eustace Marshall and workers’ representative, Eon Andrews.
One of Precision’s main principals is the current sitting Minister of Communities, Ronald Bulkan.
The “appeal” complained that case was dragging on for a long time. It was said that Richard S. Sammy, Managing Director, had ex-employees on October 22, 2015 indicating among other things that “We confirm that we have done all that we could do to ensure that there are no unnecessary delays in this matter by complying with all requests of the Honourable Court. Like the former employees on whose behalf you write, we are anxious to have this matter concluded and as such have no interest in delaying these proceedings.”
However, the ex-employees stressed that more than three years have since passed and from their point of view, the bank’s actions are not consistent with its stated position.
In fact, in the last court hearing in this matter—Precision Woodworking Ltd v Kashir Khan and Republic Bank Ltd— – was on 10th September, 2018 and what “transpired appears to be instructive. At this hearing, 8th and 9th January, 2019 were offered for adjourned dates (due to assignment of the trial Judge to Berbice for the last quarter 2018). The plaintiffs’ attorney signaled their readiness for the offered dates. Mr. Robin Stoby, attorney for the First Defendant, Kashir Khan declared his unavailability for those dates following which the afternoon of the 17th and 18th January were fixed for the next adjourned dates. Mr. Timothy Jonas, the Bank’s attorney was mute during the hearing,” the employees said.
The staffers complained that the case was filed since 15th May, 2012.
What appears to be a straightforward commercial dispute has dragged on.
“The former workers of PWL whom we represent have a keen interest in this matter given our hope that it may potentially result in receiving compensation,” the men said.
The men said that they have noted that the agreement announced recently between Republic Bank and Scotiabank to acquire the latter’s operations in nine Caribbean territories, Guyana being one. “…and will ponder as to if we should share our intimate knowledge of this case with the regulators in those jurisdictions, for any relevance.”
The Government of Guyana has warned that Republic Bank’s agreement with Scotiabank for the purchase of the local operations is not so straightforward, as there are a number of things to consider.
For example, the acquisition will place Republic Bank in control of more than 50 percent of the banking market.
At least one other Caribbean territory, Antigua and Barbuda, has said it will not approve the sale of Scotiabank’s operations to Republic Bank, which is Trinidad-owned. Rather, it wants the sale to be open to local investors.
Late last month, Scotiabank announced that it has entered into an agreement to sell its banking operations in nine non-core markets in the Caribbean (Anguilla, Antigua, Dominica, Grenada, Guyana, St. Kitts & Nevis, St. Lucia, St. Maarten, St. Vincent & the Grenadines) to Republic Financial Holdings Limited (‘RFHL’).
Republic Bank currently holds 35.4% of the banking systems assets and 36.8% of deposits. The acquisition will up this to 51% of both assets and deposits.
According to the Finance Ministry, it will have to consider the effect on competition and the potential for Republic Bank to have too much influence on pricing of banking products and rates.
Also to be considered are the burning issues related to correspondent banking options.
The Finance Ministry also expressed concern over the loss of jobs with Republic Bank with the likely consolidation of branches.
“The Ministry of Finance wishes to assure that it will continue to stay abreast of this matter, will act in the best interest of the Guyanese people and will issue subsequent updates as necessary.”

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