After being blocked, Scotiabank abandons plan to sell local operations

Sep 28, 2019 News

Canadian-owned ScotiaBank has abandoned plans to sell its local operations to Republic Bank from Trinidad.

Central Bank Governor, Gobind Ganga

The announcement came days after the Bank of Guyana confirmed that it had rejected an application for the sale which has been pending for months now.
“As a result of the decision communicated by the Bank of Guyana, the sale of Scotiabank’s operations in Guyana to Republic Bank will not move forward at this time. We will continue to deliver business as usual and focus on the best long-term solution for our employees and customers,” ScotiaBank said in a short statement.
The government had been fearful of the market share that Republic Bank would have been able to acquire in Guyana had the sale gone through.
ScotiaBank is said to be Canada’s third-biggest lender. It agreed in November to sell the business to Republic Financial Holdings Ltd, the Trinidad and Tobago-based parent company of Republic Bank, as part of a plan to exit nine countries in the Caribbean, including Guyana, Antigua and Grenada.
The Bank of Guyana cited concerns about concentration and competition in denying Scotiabank permission.

Scotiabank’s Carmichael Street Headquarters

Earlier this week, Governor of Central Bank, Dr. Gobind Ganga, told Kaieteur News that the two banks were notified of the decision via letters.
Scotiabank had, last year, resolved to sell out its assets in several Caribbean countries, including Anguilla, Antigua and Barbuda, Dominica, Grenada, Guyana, St. Kitts and Nevis, St. Lucia, St. Maarten, and St. Vincent and the Grenadines, with most of those granting approval.
The move, according to Scotiabank, is in-keeping with its strategy of focusing on its core markets with significant scale.

Republic Bank’s New Market Street Headquarters

The holders of the Trinidadian Republic Financial Holdings Limited had intended to take control of the Canadian banking institution after decades of that banking institution operating in Guyana.
Central Bank, in making its decision, took the matter through a thorough due diligence process. Central Bank executives had, last year, noted the concerns raised by several sections of society and committed to determining the extent to which the move would interfere with fair competition in the banking sector.
Kaieteur News understands that the decision to refuse approval also took into consideration whether Republic Bank has the wherewithal to acquire such a large share of the banking system, examining the matter from a prudential basis.
Ganga had assured that everything would be done to ensure that Guyana’s banking sector remains strong, sound and profitable, including engagements with his counterparts in the other territories where Republic Bank would be acquiring the banking assets of Scotiabank.
The announcement, made in November of last year, had garnered widespread criticism from several sections of the public, including the Opposition.
Opposition Leader Bharrat Jagdeo had said that the regulator shouldn’t grant approval as it “could very well be illegal”.
Mainly, it was contended that because Republic Bank currently holds 35.4% of the local banking systems assets and 36.8% of deposits, the acquisition taking both up to 51% would put the financial system at risk. It was also contended that this would interfere with the ability of other financial institutions to compete.
Government had also responded to the announcement with a warning that it would have to assess the implications of such a sale. Government noted similar concerns as the Opposition, the influence the sale would have had on pricing of banking products and rates, and the timing of the decision before First Oil.

Discover more from Kaieteur News

Subscribe to get the latest posts sent to your email.

Latest News