Antigua Insists on Deal for Local Banks in Exchange for Giving Green Light for Scotiabank Sale

Antigua and Barbuda’s Prime Minister is not backing down.

ST JOHN’S, Antigua, Thursday December 13, 2018 – Antigua and Barbuda’s Prime Minister Gaston Browne is adamant that his government will not give Scotiabank the vesting order it needs to sell its local operations unless indigenous banks are offered a chance to take over.

Scotiabank announced on November 26 that it plans to sell its banking operations in Antigua and Barbuda and eight other Caribbean countries –
Anguilla, Dominica, Grenada, Guyana, St Kitts and Nevis, St Lucia, St Maarten, and St Vincent and the Grenadines – to Trinidadian banking conglomerate Republic Financial Holdings Limited (RFHL), for US$123 million.

Prime Minister Browne subsequently announced that he had advised the Eastern Caribbean Central Bank – which has regulatory responsibility for banks operating in the twin-island nation’s domestic financial space – that his government would not be issuing a vesting order to facilitate the bank’s divestment of its Antigua holdings, saying that Scotiabank had no consultation with his administration, that the divestment had implications for the integrity of the banking system and the stability of the Eastern Caribbean currency, and that it was not in the overall interest of the country.

Speaking earlier this week, Browne insisted he was not backing down, and was willing to fight Scotiabank in court. He reiterated that unless a consortium of local banks is given the first right of refusal to acquire the bank’s operation in the country, no sale will be approved.

“We will not be issuing the vesting order unless we get a deal that is satisfactory to us….They will have to go to court because we will not voluntarily do it,” he said. “We are doing so to ensure that we can get a piece of the pie to build resilience within the indigenous banking sector to make our banks stronger.”

The Prime Minister also made it clear that his government would not be held accountable if there was a run on Scotiabank in Antigua and Barbuda.

“I say publicly without any fear of contradiction that if Scotiabank fails to provide some form of local participation, then whatever happens to the branches here and in the Caribbean is their problem,” he declared.

Guyana has also expressed concern about the proposed sale, bearing in mind the majority share of the banking sector which Republic Bank would have if it purchased Scotiabank’s operations in that country.

It noted that Republic Bank currently holds 35.4 per cent of the banking systems assets and 36.8 per cent of deposits, and the acquisition would increase that to 51 per cent of both assets and deposits.

Last week, CARICOM’s competition watchdog said it was keeping a close eye on Scotiabank’s transactions, not only in the banking deal but also its plan to sell its Scotia Life Insurance business in Jamaica and Trinidad and Tobago to a new company that would be created following a deal by Toronto-based firm Alignvest to acquire Sagicor Financial Corporation.

“The Commission advises that it shall continue to monitor these developments in the banking and insurance sectors. Any impact to the community market by the proposed acquisitions will be assessed in accordance with the RTC [Revised Treaty of Chaguaramas],” commission chairman Justice Christopher Blackman had said in the statement.

Click here to receive news via email from Caribbean360. (View sample)