Scotiabank: We broke no laws announcing deal to sell Guyanese assets to First Citizens

Canadian multinational Scotiabank has defended its announcement of a sales agreement of its operations in Guyana with TT-based First Citizens bank, saying it acted in line with the financial laws of each country.

Scotiabank TT chairman Derek Hudson on Wednesday said it was not premature for the banking group to announce the sale which is still to be approved by Guyana's financial regulators.

“We conduct our business as should be conducted in accordance with the regulations of each country and then when the responses come out, they are addressed accordingly. I would say whether the organisation was surprised or not,” Hudson said in a session with the media after Scotiabank's virtual annual general meeting.

He said Scotiabank operated within the remit of the Guyana’s laws and regulatory bodies.

His clarification on the matter came after Guyana’s Finance Minister Dr Ashni Singh chastised as “premature and inappropriate” Scotiabank's announcement to sell its Guyanese assets to First Citizens, which is majority-owned by the TT government.

Singh said, “Government found the announcement unfortunate", since section 12 of the Financial Institutions Act stipulates no financial institution may transfer the entire or a substantial part of its operations without prior approval from the Bank of Guyana.

Scotiabank’s managing director Stephen Bangarol also said he does not believe any laws were breached.

“This was part of the bank’s (Scotiabank) strategy, that has been there since 2018, that we announce the sale. These are tough decisions and part of having a strategy is making tough decisions, where to invest and deploy capital.

“I cannot comment on the direct act but Scotiabank works in many countries and we abide by all the rules, laws and regulations and will work with the Guyana government to make sure that we continue with this process with First Citizens. We will follow all the procedures they require from us.”

Scotiabank currently operates four banks in Guyana.

The sale, according to Scotiabank, is a part of its strategic plan to focus on operations where it can achieve greater scale and deliver the highest value for customers.

At the AGM, shareholders were updated on the bank's financial performance last year, during the covid19 pandemic.

Chief financial officer Reshard Mohammed said although there was a decline in profitability in 2020, the bank’s averages remain very healthy.

The group reported net income after taxation of $521 million for the year ended October 31, 2020, a decrease of $147 million or 22 per cent over the comparative period in 2019.

“This decline was mainly due to the impact of covid19 over the last three quarters of the financial year, resulting in lower revenues and higher provisions for credit losses. This decline in profitability is consistent with what has been experienced by our local and regional peers as the impact of covid19 has impacted virtually all economic segments within TT,” Mohammed reported.

Total revenue was $1.8 billion, a decrease of $83 million or four per cent versus the prior year, he added.