The birth and development of Guyana’s financial system began in the early colonial days when Guyana was ruled by the British Government. The first financial institution that was formed since in the colonial days was the Savings Bank, which was primarily founded for the benefit of the slaves. When the country gained Independence from British rule, there were substantial changes in the financial system; other foreign banks entered into the system.
Prior to the establishment of the Savings Bank in 1828, banking transactions were effected in Europe by the local planters and their attorneys. In 1836 the Savings Bank was supplanted by the Government Savings Bank, which through the years, had various amendments and became known as the Post Office Savings Bank.
In 1836, the Colonial Bank was established in British Guiana which was founded by a Royal Charter given by King William IV dated May 1, 1836, and was formed by a consortium of West Indies merchants and private bankers in London. The Colonial Bank operated in the premises of the Demerara Mutual Life Assurance Society Ltd in High Street, Georgetown. It was then amalgamated with the Anglo Egyptian Bank Ltd and the National Bank of South Africa in 1925 and renamed Barclays Bank (Dominion, Colonial and Overseas). Also in 1836, a local bank was formed called the British Guiana Bank which commenced operations in February 1837, conducted its business in Georgetown for a number of years and eventually ran into difficulties and was taken over by the Royal Bank of Canada in November 1913.
During the period of 1800 to 1913, these banks continued to operate in the British Guiana Economy and this structure of the financial system remained substantially unchanged from 1913 until 1966 when Guyana gained independence from the British Government.
Post-independence
By the end of 1966 the two dominant banks, the Royal Bank of Canada and the Barclays, were operating more than 25 branches and agencies. In the following years, many rural branches and agencies closed mainly because it was not profitable to have so many branches given the geographic dispensation, population and also socio- economic and political conditions prevailed at the time.
In 1970 the Government felt that these institutions did not provide the type of financing required to develop the Guyanese economy, thus the authorities embarked on a strategy aimed at shaping a financial system that would mobilise deposits and provide loans to the rural areas, provide long-term finance for investments and supply resources in support of local firms. In February 1970 the Government established the Guyana National Co-operative Bank (GNCB) as a development bank, thus was given the task to provide for the commercial financing requirements of Guyanese Businesses, to support investment in new business areas and to extend financial services to rural communities.
In 1984, as part of the restructuring programme in the financial sector, the Government started a process of nationalising foreign owned commercial banks beginning with the Royal Bank of Canada, which became National Bank of Industry and Commerce (NBIC). The next bank to experience a change in ownership was the Chase Manhattan in 1985 (then renamed Republic Bank), followed by Barclays in 1987, when it was renamed the Guyana Bank for Trade and Industry Ltd. (GBTI). Government took control of GBTI in 1988, and it was merged with Republic Bank and operated as GBTI in 1990. Thus the Government had owned a substantial part of the commercial banking system by 1990. In 1991 the Government converted GBTI into a public company selling off 70 perc ent of its shareholdings and in 1994 sold the remaining 30 per cent to Secure Finance International Company Ltd.
On October 1997, Republic Bank Limited of Trinidad and Tobago became majority shareholder after purchasing 47.5 per cent shares from the Government for NBIC and in 2006 the official name of the bank (National Bank of Industry and Commerce) was re-branded to Republic Bank (Guyana) Ltd. Importantly to note however, Republic Bank Ltd Trinidad & Tobago had sought the permission to use the name ‘Republic Bank’ from GBTI to avoid any legal conflicts between the two entities since GBTI had the sole right to that name (which it had inherited from Chase Manhattan).In 1994 Government gave licences to two banks, Demerara Bank Ltd and Citizens Bank Inc. Citizens Bank Ltd was incorporated in November 1993 and commenced business in 1994 as a wholly owned subsidiary of Citizens Bank Jamaica Ltd. In September of 1996, Citizens Bank Jamaica reduced its ownership of Citizens Bank Guyana Inc to 70 per cent and in November of 1998 Guyanese shareholders acquired the remaining 70 per cent share in Citizens Bank Guyana Inc held by Citizens Bank Jamaica Ltd. Banks DIH Ltd, a company incorporated in Guyana, acquired sufficient additional shares to enable it to own 51 per cent of the share capital of the bank.
Demerara Bank was the first Private Sector Indigenous bank incorporated in 1992 and started operations in 1994. Demerara Bank, unlike all the other banks that have existed in the past and have evolved with the passage of time from different ownerships, from foreign owned to Government owned then to private ownership, is wholly owned by Guyanese – founded by a local entrepreneur (a successful and renowned business man in Guyana, Dr Yesu Persaud).
The ownership of Bank of Baroda (Guyana) Ltd, (a subsidiary of Bank of Baroda India) and the Bank of Nova Scotia remains foreign owned to date. Bank of Baroda and Bank of Nova Scotia commenced business in Guyana in 1966 and 1968 respectively. These two banks came into Guyana to operate after independence.
Guyana’s financial system evolved within the framework of a market based economy. Over the years there were wide-ranging financial reforms which have resulted in creating a more dynamic banking system and was conducive to macroeconomic stability. In addition, it has evolved from a financially repressed, highly regulated and inefficient system into a sound, stable and more efficient system. Technological advancement is one of the driving tools in creating greater efficiency and new and innovative financial products.
