Bank of Baroda reverses decision to sell its Guyana operations

Aug 06, 2019 News

Indian-owned Bank of Baroda has changed its mind about selling off its Guyana operations.

Indian-owned Bank of Baroda has changed its mind about selling off its Guyana operations

More than seven months ago, the Mumbai-headquartered bank announced that it wanted to focus on a number of key countries – including Singapore, the US, UK and United Arab Emirates (UAE). It decided that it would sell a number of its operations, including Guyana.
Following reports that the bank has reversed that decision and will be staying, Kaieteur News was yesterday able to confirm that this was indeed so.
Governor of the Bank of Guyana, Dr. Gobind Ganga, said that the Bank of Baroda will no longer be leaving, but declined to go into detail, saying that matter will be addressed later.
However, Kaieteur News was told that high-level officials have been in communication with Bank of Baroda’s headquarters since the Indian headquarters formally announced its intentions to divest the Guyana’s operations in December.
A number of letters were written and Guyana’s emerging oil and gas industry was pointed out.
The bank has two branches here, and the announcement last year would have come on the heels of a decision that the Bank of Nova Scotia was selling its operations to Republic Bank.
Bank of Baroda has been profitable in Guyana. Yesterday, Bank of Baroda (Guyana) Managing Director, Arun Kumar Gupta, confirmed the news.
The bank controls about three percent of the banking market shares in Guyana.
In all, the bank has 9,583 branches worldwide with 69 million customers.
The Guyana subsidiary’s total business stood at $14.56B at the end of September 2018, down from $20.576B at the end of March 2017 and $21.09B at the end of March 2016.
In December, according to a Request for Proposal (RFP), the bank said that it was seeking investment bankers for the sale/disinvestment of its entire 100 percent stake in the Bank of Baroda (Guyana) Inc. (BOBGI) operations.
According to the bid documents, “The Bank wished to invite proposals from interested empanelled “Investment Bankers” for the purpose of finding buyers for Bank of Baroda’s 100 % stake in BOBGI. This will be based on and subject to the conditions included in this document, the Non-Disclosure Agreement, and any other related documents to be issued/signed off by the bank in this regard.
(See link https://www.bankofbaroda.com/writereaddata/Portal/Tender/1357_1/1_RFP-Guyana.pdf).
Bank of Baroda (BoB) has two branches in Guyana – one located on the Avenue of the Republic in Georgetown, and Mon Repos, East Coast Demerara.
PS Jayakumar, Managing Director and Chief Executive Officer, BoB, had also spoken of tapping into some prominent Asian markets.
“The bank is trying to look east a little bit. We have done some kind of an alliance with a leading Korean bank,” he had said in July last year. “They are all new markets that we need to look at, such as Korea and Japan, where there is a large amount of business going through.”
That might signal a gradual move out of the bank’s six subsidiaries in Africa, one in Trinidad and Tobago and another in New Zealand.
In February last year, the bank decided to move out of South Africa in the wake of allegations that it facilitated money laundering by a non-resident Indian family in the country.
Local banks have been complaining that tougher anti-money laundering laws have been placing significant burden on them, with high costs associated with the intense reports that have to be produced for regulators.
According to the Bank on its justification for the intended sale, part of the impact was a result of a regulatory restriction on issuance of Letters of Undertaking (LoUs), which shrunk the international portfolio of the bank to `19,000 crore from `38,000 crore over the April-June quarter of Financial Year (FY) 2019.