Sale to Republic Bank will not move forward – Scotiabank

Three days after Central Bank of Guyana denied the application for Republic Financial Holdings Limited, the parent company of Republic Bank (Guyana), for the purchase/acquisition of the operations of Scotiabank in Guyana, the Canadian bank has said that it will continue business here until a solution can be made on the issue.
In a brief statement, Scotiabank’s Manager – Communications and Corporate Social Responsibility (Caribbean), Cindy Mohammed 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,” Mohammed said in the statement.
Meanwhile, President and CEO of Republic Financial Holdings Limited (RFHL), Nigel Baptiste, has since said that while the development is disappointing, “we do not dwell on disappointment. As a group, we remain fully engaged and committed to supporting the nation of Guyana through our operations there, as well as toward ensuring the success of all activities for which we have 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”.
On Tuesday, Governor at the Central Bank of Guyana, Dr Gobind Ganga, told Guyana Times that the application was denied in light of concerns about “concentration” and “competition” which would have negative impacts on the country’s financial system.
He stated that both banks were notified about the Central Bank of Guyana’s evaluation and position on this matter.
“…to tell, more specifically, Republic Bank that we could not approve their application for the merger or acquisition of the assets because of a number of factors. But largely it would be the high level of concentration in the financial and/or banking system that would have had an impact on the health of the financial system with respect to systemic risks. In addition, with respect to cost because it would have led to lower cost efficiency meaning that competition would have been affected,” Ganga told this publication.
According to Dr Ganga, had Republic Bank (Guyana) been allowed to forge ahead with its planned takeover of Scotiabank’s operations here, then this would have resulted in systemic effects.
“It could cause things happening in the financial system which we could not control…we would have indicated to Scotiabank that we don’t have a problem in terms of the bank wanting to sell but we would have liked for them to look into the areas where you would not have the concentration and you have a proper, potential buyer,” he added.
In late November 2018, after the proposed buyout was announced, Opposition Leader Bharrat Jagdeo had stated that Republic Bank Limited’s acquisition of Scotiabank’s operations in Guyana could be unhealthy for the local financial sector.
His statements came on the heels of the Canadian-based Scotiabank announcing that it has signed an agreement to sell its banking operations in Guyana and eight other Caribbean nations to Republic Financial Holdings Limited.
Last November, Republic Bank had announced that it was seeking to acquire Scotiabank operations in St Maarten, Guyana, Anguilla, St. Kitts and Nevis, Antigua and Barbuda, Grenada, Dominica, St Lucia, and St Vincent and the Grenadines.
On September 7, 2019, Eastern Caribbean Central Bank (ECCB), in consultation with the ECCB Monetary Council, had approved the application for the transfer of the assets and liabilities of the Bank of Nova Scotia to the Republic Financial Holding Limited (RFHL) in Anguilla, Dominica, Grenada, St Kitts and Nevis, Saint Lucia and St Vincent and the Grenadines.