Region worried over Republic's Scotia takeover

The Antiguan government has blocked Republic’s million-dollar acquisition of Scotiabank’s assets in that country, while the Guyana Finance Ministry has said the transaction “raises concerns and is regretted.”

The deal, announced yesterday, is still subject to regulatory approval, and in a letter to Scotiabank’s general manager in Antigua, Suzan Snaggs-Wilson, Antigua and Barbuda Prime Minister Gaston Browne was adamant that will not happen until an application is made to the government and approval is given.

Browne also wants assurances from Scotiabank that local banks will be given priority to purchase its operations in Antigua, and that local investments and savings will be protected. In his letter, Browne was not pleased that Scotiabank would “decide to sell its operations in Antigua and Barbuda without any form of consultation with the regulators or the finance minister whose agreement and authority for such a sale are required by law”.

“I hereby inform the authorities of the Bank of Nova Scotia that their decision to sell the operations in Antigua and Barbuda, without the requisite consultation and agreement of the regulators and the Government of Antigua and Barbuda, is unacceptable,” Browne said. He said that despite the “unexpectedness” of Scotiabank’s announcement, there was already a consortium of local banks interested in the assets. The government now expects a formal announcement, as well as the terms of the divestment and a reasonable time to identify new local owners.

Speaking to Newsday, radio presenter Denis Seon noted that the country was not at all familiar with Republic, despite its position as the biggest indigenous financial institution in the region. Scotiabank, on the other hand, was one of the biggest, with two branches, one in the capital, St John’s, and another just on its outskirts.

Guyana’s Finance Ministry was also not thrilled by the news, since the deal would make Republic’s share of the country’s banking sector more than 50 per cent. Republic, which already has a significant presence in the country, holding 35.4 per cent of banking assets and 36.8 per cent of deposits, will now increase that to 51 per cent.

The ministry was disappointed by Scotiabank’s decision to pull out of that market just as it was on the cusp of transformation from oil and gas.

“This raises concerns about an over-concentration of banking services, market domination and ‘too big to fail’ risk,” the ministry said in a release. The ministry was also concerned about the effect on competition and the potential for Republic to have too much influence on pricing for banking rates and products, as well as job losses.

In a surprise announcement yesterday, Republic announced it will purchase Scotiabank’s holdings in Guyana, St Maarten and the Eastern Caribbean for US$123 million.

While Newsday was unable to speak to any Scotiabank officials, sources said the bank is not planning to pull out of its other markets, including TT and Jamaica – at least for now.

Republic’s chairman, Ronald Harford, said the acquisition represents another major milestone for the Republic group.

“We are confident that our expanded presence or entrance in those markets will redound to the benefit of Scotiabank’s clients and employees as well as Republic’s existing stakeholders,” Harford said in the release.

This is not the only major acquisition this year for Republic: it is already well on the way to owning the majority share in Cayman National Bank – a transaction set to cost about US$143 million.

The company earlier this month announced a TT$1.3 billion profit for 2018, driven primarily by growth in its overseas markets. Republic’s total asset base as at September 30, stood at US$10.5 billion. and this acquisition will increase that by about US$2.5 billion.

Scotiabank’s group head of international banking, Ignacio Deschamps, added via the release, “Scotiabank is proud to work with the Republic Group – a leader in financial services in the Caribbean who is well positioned to invest and grow the business.”