…as BoG blocks Republic Bank takeover

IN light of the central bank’s move to block its sale to Republic Financial Holdings Limited (RFHL), Scotiabank says it will continue to deliver business as usual and focus “on the best long-term solution” for its customers and employees.

In a brief statement on Friday, the bank said that its sale to RFHL will not move forward at this time.

Central Bank Governor, Dr. Gobin Ganga, told the Guyana Chronicle earlier this week that both banks were informed of the decision to block the takeover.

He said the denial of the application for the takeover by RFHL, branded as Republic Bank, was due largely to the high level of concentration of the banking system, noting that “it would lead to systemic issues” which would have affected the financial system here.

On Thursday, Republic Bank expressed disappointment at the move by the central bank.
“While this development is disappointing, we do not dwell on disappointment,” said President and Chief Executive Officer (CEO) of RFHL, Nigel Baptiste, adding that the company remains fully engaged and committed to supporting Guyana through its operations.

The company also plans on ensuring the success of all activities for which it has received the requisite regulatory approvals, under the proposed BNS acquisition.
“We appreciate the Bank of Guyana’s acknowledgement of the value of our longstanding role in the development of Guyana’s financial landscape and our continued contribution to the financial sector,” said Baptiste.

Dr. Ganga explained earlier this week that the move would have led to lower cost efficiency, adding that it would have stymied competition in the local sector. He said Republic Bank would have had over 50 per cent assets and deposits in the local sector, which would have raised “major concerns” such as impact on competition.

Both banks have done very well in Guyana, Dr. Ganga said. He said the Republic Bank has played a very good role in Guyana and this is why they would have wanted to advance their footprint. However, he reiterated that the planned move would have had an adverse impact on the banking system.

He said Scotiabank is free to sell their operations and with the evolving oil and gas industry here, it can take advantage of the opportunities which lay ahead.

In November 2018, the Bank of Nova Scotia, which trades as Scotiabank, reported that fourth-quarter earnings were marginally below expectations and said it planned to exit nine countries in the Caribbean as part of a shake-up of that business.

Scotiabank said it planned to sell its banking operations in Anguilla, Antigua, Dominica, Grenada, Guyana, St Kitts & Nevis, St Lucia, St Maarten, St Vincent & the Grenadines to Republic Financial Holdings.

In a statement subsequent to the announcement, Guyana’s Ministry of Finance frowned on the move. It said Republic Bank currently held 35.4 per cent of the banking systems assets and 36.8 per cent of deposits in Guyana and the acquisition of Scotiabank would up this to 51 per cent of both assets and deposits.

“This too will have an impact on competition and the potential for Republic Bank to have too much influence on pricing of banking products and rates. The sale will also have an impact on issues related to correspondent banking options and the loss of jobs with Republic Bank likely to consolidate branches,” the Finance Ministry said.

Earlier this month, the Eastern Caribbean Central Bank (ECCB), in consultation with the ECCB Monetary Council, approved the application for the transfer of the assets and liabilities of the Bank of Nova Scotia to the Republic Financial Holdings Limited in several regional territories.