With two int’l banks eager to retreat from Guyana...Finance Minister hopes oil will lure alternative western banking services

With two int’l banks eager to retreat from Guyana…Finance Minister hopes oil will lure alternative western banking services

May 20, 2019 News

By Kiana Wilburg
Two international banks are poised to make a clean cut from Guyana. Bank of Baroda which is headquartered in India has informed the Government that it will be selling its operations here. Canada’s Bank of Nova Scotia is also selling off its branch here to Republic Bank, pending the approval of Government.

Finance Minister, Winston Jordan

Speaking with Kaieteur News recently, Finance Minister, Winston Jordan noted that the exit of the two banks from these shores will have implications. He said that the absence of the correspondent banking services provided by these banks would leave the system more cumbersome in terms of automaticity. The economist said that going forward; government will have to seek new or more non-traditional partners.
The Minister said, “We have to see what alternative western banking service we can get and also to look and see what nontraditional banking service might be available. Right now we are using Crowns Agents Banking…We are looking for more banks to come in but we believe that once the oil starts flowing and business starts picking up then we would or may start to see more coming in.”
REPUBLIC BANK / SCOTIA DEAL
Minister Jordan was keen to note that he was at no point in time, informed of Scotia’s intention to sell its assets to Republic Bank prior to when it came to the media’s attention in November last year.
Considering this, Kaieteur News asked Jordan to say who is monitoring and/or may have dropped the ball in adequately forewarning the government about this tremor in the banking sector.
Jordan said, “You are hardly forewarned when you are dealing with these kinds of institutions. One of the reasons these banks are pulling out is because of de-risking… And the American banks were pulling out early from the region. It was only a matter of time before the other international banks started pulling out.”
The Minister said that in addition to having to operate on small margins, these margins are also being eroded by all the paper work pertaining to meeting rigid anti-money laundering requirements.
“They are not going to operate in the small markets, and it is unfortunate because banking has to go on in these territories,” expressed the economist.
Further to this, Jordan said that the move by Scotia to sell its assets to Republic Bank is unlike what took place in the past. In this regard, Jordan recalled that when the Royal Bank of Canada wanted out of Guyana’s market, they sold the assets to the government for a dollar. When Chase Manhattan wanted to pull out, Jordan reminded that they approached the government. The economist said that the same was done by Barclays too.
“Because of their approach, Chase and Barclays were then merged and we called it Guyana Bank for Trade and Industry (GBTI),” the Minister said. In the case of RBC, the Minister noted that it became the National Bank for Industry and Commerce, which is now Republic Bank.
Jordan noted that the sale of Scotia’s operations to Republic Bank is still undergoing a due diligence test by Central Bank. If approved, Republic Bank would have control for more than 50 percent of the total assets in the banking sector and more than 50 percent of total deposits.

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