Canadian-owned Scotia-bank announced yesterday that it has reached an agreement for the sale of its banking operations in Guyana to First Citizens Bank Limited of Trinidad and Tobago, a move that Minister with responsibility for Finance, Dr Ashni Singh labelled as “premature and inappropriate”.
The agreement is subject to regulatory approval and customary closing conditions, according to a release from Scotiabank.
“This transaction supports Scotiabank’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, all employees will continue to support the business.
“First Citizens is one of the leading financial services groups in the English-speaking Carib-bean. 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 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, Scotiabank’s operations in Guyana will continue as usual. First Citizens and Scotiabank will work together to facilitate a smooth transition for the business”, the release said.
In a statement several hours later from the Minis-try of Finance, Singh criticised the announcement.
“It has been just been brought to my notice that a press release was issued … announcing a sale of the operations of Scotiabank Guyana to a Regional Bank -a Trinidadian Bank in particular. I wish to say that the Government of Guyana considers it extremely unfortunate that this transaction was announced- bearing in mind that any such transaction is subject to a specified regulatory process. In particular, Section 12 of the Financial Institutions Act stipulates that no financial institution may transfer a whole or a substantial part of its operations in Guyana without the prior approval of the Bank of Guyana,” the Minister told reporters at the Arthur Chung Confer-ence Centre where he had been participating in the examination of Budget 2021 Estimates.
“Considering that the Laws of Guyana require this process, we consider it premature to announce a transaction of this nature”, Singh said. He added that it is the intention of the government and Guyana’s financial sector’s regulatory supervisor, the Bank of Guyana, to ensure that the Laws of Guyana are complied with in the fullest and to ensure that appropriate processes of due diligence required are initiated and concluded before any such transaction can be proceeded with.
The Finance Minister said that both Government and the Central Bank remain firmly committed to ensuring the maintenance of a stable, strong vibrant, dynamic and growing financial sector especially during the current period as “it is important that the financial sector is adequately equipped to meet the needs of our evolving economy which as viewers would know is currently going through dramatic changes”.
He added that Government’s primary objective remains the preservation of a strong and stable financial sector and one that is dynamic and competitive.
Analysts say that with Guyana in the midst of an oil boom, the government will be perturbed that the Canadian-owned bank still wants to leave the sector. The departure of the bank could send an adverse signal to other investors and raise doubts about how the investment climate is perceived. Furthermore, with the recent establishment of a Canada-Guyana Chamber of Commerce there would have been the expectation that a Canadian bank would have been able to capitalise on business opportunities. Analysts also say there would be concerns about concentration of banking interests in Trinidadian banks. Republic Bank of Trinidad is already the largest bank here.
In November of 2018, Canada’s Bank of Nova Scotia had announced that it had struck a deal to sell a string of its Caribbean branches, including Guyana’s, to Republic Bank. The Bank of Guyana in September of 2019 rejected this deal.
Then Minister of Finance Winston Jordan had told Stabroek News that Cabinet was alerted to letters that BoG Governor Dr Gobind Ganga had dispatched to the Trinidad-headquartered Republic Bank and Scotiabank “and also the letter that was written to me, indicating that having done their examination and taking all the circumstances into consideration that they [BoG] could not approve the application.”
“This was discussed at Cabinet this morning and Cabinet concurred with the Governor’s pronouncement and they agreed that the reasons given were important reasons and the critical one being concentration, the risks involved and so on, AML/CFT [Anti-Money Laundering and Combatting the Financing of Terrorism] considerations, the lack of supervisory capacity by the bank itself; they are now building that capacity and so on. So when you take all of that into consideration, we did not feel that this application would be in Guyana’s best interest,” he had said.
In response, on September 27, 2019, Scotiabank said “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”.
