ONE of the most important items of financial news which came out in 2018 was the purchase agreement between the Bank of Nova Scotia (Scotiabank) of Canada and Republic Financial Holdings Limited (RFHL) of Trinidad, which is the parent company of the Republic Bank branches, By this agreement, RFHL will purchase all the Scotia banking operations in Guyana, St Maarten and the Eastern Caribbean territories including Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, St Lucia and St Vincent and the Grenadines.

The news of this sale came unexpectedly to the business community and even at the recent Annual General Meeting of the Guyana branch of Republic Bank, it was admitted that the local branch was in no way involved in the purchase negotiations. The contracting parties, however, each issued public statements: Scotia announced that until the sale is finalised . . . “the customers of the bank do not need to make any changes to their accounts, loans, or other banking services at this time.” Scotia then went on to assure customers “we will work closely with Republic Bank to provide as smooth a transition as possible for all customers and employees and as part of the transition, all the impacted employees will join Republic.”

Mr Ronald Harford, Chairman of RFHL, in his statement spoke of his group and Republic Bank’s commitment to the Caribbean which he emphasised is their home. He went on to declare . . . “Our interest, however, is not just in the financial well-being of our clients and employees, but in the overall success of the societies in which we operate and on which we depend for our livelihood. . . .we acknowledge the concerns expressed by the Governments of Antigua and Barbuda and Guyana and we intend to fully comply with all regulatory requirements in fulfilling our vision. We are optimistic that when the facts are fully articulated to the relevant authorities, the merits associated with the group’s presence in the various territories will become evident.”

With such important changes being brought to the country’s financial system, the Government of Guyana with the nation’s well-being at heart and the interests of the consumer community made its immediate response. The Hon Winston Jordan, Minister of Finance, posited: . . . ” The Scotiabank decision is being made when Guyana’s economy is on the cusp of financial transformation with the onset of the new massive oil and gas sector raises concerns and is regretted. Among our concerns is the effect on competition and the potential for Republic Bank to have too much influence on the pricing of banking products and rates, issues related to correspondent banking options and loss of jobs as a result of Republic Bank consolidating branches.” Minister Jordan also indicated that the RFHL purchase of Scotia will have to be in conformity with the Financial Administration Act (FIA) and the regulations of the Bank of Guyana. The Ministry of Finance is still studying and analyzing the issue and has not so far expressed any final position.

We are of the opinion that government should enlist the position and even the advice of the banking sector, the Private Sector Commission and the Georgetown Chamber of Commerce and Industry, since the amalgamation of Scotia with Republic will transform the banking sector in a fundamental way.

We think that the sale of Scotia to Republic would give Republic at least 51% control of the banking sector and would give it many of the characteristics of a monopoly. This would imply that charges for banking services could be increased, or services could be shoddy without any real possibility of redress. Such majority control of the banking sector could affect rates as well. We are also of the view that the banking and financial sector of the country, in particular now that we are on the threshold of becoming an oil-producing country accessing substantial wealth, should be in the hands of and controlled by local Guyanese interests.

In the event that the sale of Scotia to Republic does not materialise, the various courses of alternate action should be thoroughly explored. One of these alternatives could be having a number of interested businesses and banks combining to buy Scotia and offering a substantial percentage of the shares to the Guyanese public. We are of the view that Guyanese should be confident and optimistic that the final outcome of this issue will be in the national interest, especially since the Ministry of Finance has committed itself to keep abreast with the issue and act in the best interest of the citizenry and provide updates as movement occurs.