Mar 04, 2021 News
– Govt. calls move “premature and inappropriate”
Kaieteur News – Scotiabank announced yesterday that it has reached an agreement for the sale of its banking operations in Guyana to First Citizens Bank Limited (“First Citizens”). The Bank, in a statement noted that the agreement is subject to regulatory approval and customary closing conditions.
However, shortly after the announcement, Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh, made it clear that the deal, thus far, has not received government’s blessings. In essence, Dr. Singh said that no approval has been granted by the Bank of Guyana (BOG). He has deemed Scotiabank’s announcement “premature and inappropriate.”
Dr. Singh explained that any such transaction is subject to a specified regulatory process.
He said government finds it unfortunate that the announcement was made, since Section 12 of the Financial Institutions Act (FIA) stipulates no financial institution may transfer the entire or a substantial part of its operations without prior approval from the Bank of Guyana.
“Considering that the laws of Guyana require this process, we consider it premature to announce a transaction of this nature, particularly given that the regulatory process to consider the request for any such transaction is yet to be initiated, much less to be concluded,” the Minister pointed out.
“It is the intention of the Government of Guyana and indeed, it is the intention of the regulator and the supervisor of the financial sector, that is to say the Central Bank, to ensure that all applicable laws are complied with in the fullest and in particular, to ensure that appropriate processes of due diligence and other processes required under the laws of Guyana are initiated and concluded before any such transaction can be proceeded with,” the Senior Minister added.
Meanwhile, Scotiabank said in its statement, that the transaction supports the Bank’s strategic decision to focus on operations across its footprint where it can achieve greater scale and deliver the highest value for customers. Scotiabank’s current operations in Guyana encompass four branches and approximately 180 employees. Following closing, it informed, all employees would continue to support the business.
First Citizens is one of the leading financial services group in the English-speaking Caribbean. Headquartered in Trinidad and Tobago, First Citizens offers a full range of retail, corporate and investment banking services, as well as wealth management, trustee and brokerage services to clients through its operations in Barbados, Costa Rica, St. Lucia, St. Vincent and the Grenadines and Trinidad and Tobago. The transaction, Scotiabank said, supports First Citizens strategic growth across the region and leverages its strengths in innovation and excellence to the benefit of all stakeholders.
Until regulatory approvals are obtained and the transaction closes, the Scotiabank statement assured that operations in Guyana would continue as usual. In the mean time, it noted that First Citizens and Scotiabank will work together to facilitate a smooth transition for the business.
A point to note though is that this is Scotiabank’s second attempt in recent times to sell off its operations.
The first announcement was made in 2018.
Scotiabank, which is said to be Canada’s third-biggest lender, reportedly agreed then 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, Anguilla, Antigua, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, St. Maarten, and St. Vincent and the Grenadines.
However, the following year BOG Governor, Gobin Ganga, decided to block the deal in Guyana due to competition and market concentration concerns. Then Finance Minister, Winston Jordan, had agreed with the governor’s reasoning, stating that he “did not feel that this application would be in Guyana’s best interest.”
But it would seem that Scotiabank is intent on selling off to a Trinidad-based banking establishment, because like Republic Bank, First Citizens is also headquartered in Trinidad.
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