ON April 2, 2018, the CARICOM Competition Commission (CCC) based in Paramaribo, Suriname, issued a release pertaining to the sale of the Scotiabank branches in the various Caribbean territories to the Trinidad-based Republic Financial Holdings Ltd (RFHL). RFHL has branches throughout the Caribbean and its Republic Branch is the largest bank in the country. The sale was announced in November last year and the territories affected were Guyana, St Maarten, Anguilla, Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, St Lucia and St Vincent and the Grenadines. The total sale price was US$123 million.

Last December, the CCC issued a preliminary release to the effect that they were taking cognisance of the sale. Now they have issued a fuller release: Acting under the Revised Treaty of Chaguaramas the CCC “reminds national competition authorities and member states of Article 175. The commission also informs that it shall approach those national competition authorities and sector regulators. . . for the conduct of preliminary examinations of proposed transactions between the enterprises.” The enterprises referred to are of course Scotiabank and RFHL.

In its release, the CCC further went on to point out that in accordance with Article 175(2)(a) of the Revised Treaty of Chaguaramas (RTC), ” it would continue to monitor these developments in the banking and insurance sectors and that any impact to the CARICOM Community by the proposed transaction would be assessed in accordance with the provisions of the RTC.

It went on to state that it has now completed a preliminary assessment and that such assessment indicates that the proposed transaction or parts thereof would possibly have anti-competitive effects in at least three member states of the Community.”

Important for consumers, the CCC emphatically declared that “in furtherance of its commitment to fair and transparent processes for both the business community and consumers, it will continue to monitor the activity in the Community and will inform as appropriate in the further progress of this matter in affected member states.”

The sale has had several ramifications, among the two most important being its effect on the employees of Scotiabank and its effect on the consumers and business, and particularly the banking sector. The Prime Minister of Antigua and Barbuda, Mr Gaston Browne, was the first CARICOM leader to react. He declared: “In the case of Antigua and Barbuda, we are not giving Scotiabank any vesting order. They are not going to get it. We are firm on that. However, in the unlikely event they were successful in selling this Antiguan branch to Republic Bank, they will have to pay the severance . . . the staff will be given the right to exercise options of taking severance and continue to work, take the severance and leave, or if they wish to commute their service.”

Guyana is one of the three states identified by the CCC as being adversely affected. The Guyana Consumers Association had expressed its disquiet in this column at the time the sale was first announced.

If Republic Bank were to take over the local Scotiabank, Republic Bank would control over 60 percent of the banking business in Guyana. With such control over the banking sector, the other smaller banks would be at a disadvantage and none of the locally owned smaller banks would wish to have such a scenario.

The consumers could very well suffer the effects of monopolistic control. For one, credit they could access would be controlled and some consumers may find themselves in difficulty, because of denial of loans. The interest rates, both at saving and lending levels, would be against consumers’ interests. At the present time, from a consumer’s perspective, it is bad enough — savings interest is two per cent to three per cent, while lending is 12 per cent to 15 per cent. With monopolistic control, it may be even less favourable to the consumer.

With regard to the workforce, Scotia, so far, has said that the present staff would be absorbed into Republic Bank and would enjoy the same conditions and facilities as they do at present. The formula put forward by Antigua’s prime minister would seem to be the fairer option.

It is expected that the Competition Commission, the Bank of Guyana and the Ministry of Finance would now be involved more positively and engage the issue publicly.

To consumers, if Scotia sells its Guyana branch, it should be sold to one of the smaller locally owned banks or a consortium of such banks. In every case, it must be ensured that a substantial proportion of the shares is sold to the Guyanese public.