C'bean bankers give Scotia-Republic deal thumbs up

The Caribbean Association of Banks (CAB) said yesterday it supports Republic Financial Holdings Ltd’s (RFHL) proposed takeover of Scotiabank’s Eastern Caribbean, Guyana and St Maarten assets.

In a media release, the CAB said the fact that Republic is in a position to acquire these assets from a major international bank, “despite the myriad challenges facing the regional banking sector,” is to be commended. “This is a true reflection of the ongoing maturity of the financial services sector in the Caribbean… We applaud RFHL for their confidence in the region and sector,” CAB said.

The association said it had noted concerns from some regional governments about the move, and while it acknowledged some of these to be “well-founded,” the CAB views this development as a positive opportunity for the region.

When the news of the acquisition broke some three weeks ago, the governments of Guyana and Antigua and Barbuda almost immediately voiced their concerns, with Antigua and Barbuda suggesting they would move to block approvals.

But, CAB said, the region has, in its history, experienced migration, acquisition and consolidation of both local and international financial services companies, and despite this, the sector has continued to be stable.

Scotiabank has said the reason for its exit from these markets is simply to refocus on size and scale, and emphasised that it would not be pulling out entirely from the region.

Scotiabank’s decision to refocus its investment options into bigger markets to take advantage of economies of scale underpins a need for indigenous banks to strengthen their positions to remain viable and competitive as the global market evolves, CAB said. Given the challenges in the global financial sector, mergers and acquisitions will continue to be the norm, and regional banks should position themselves to take advantage of these opportunities as the region moves to operationalise the Caricom Single Market and Economy, CAB said.

"We must place reliance and trust in the mechanisms that regulators and governments will employ to preserve the financial integrity of the regional financial services industry and the growth and development of our economies.”