PARAMARIBO, Suriname, Thursday December 6, 2018 – The Caribbean Community (CARICOM) Competition Commission says it’s closely monitoring the proposed controversial sale of Sociabank’s banking assets in nine Caribbean countries, as well as the financial institution’s plan to sell out its life insurance business in two other regional countries.
In a statement yesterday, the Suriname-based Commission, which was established to promote and protect competition within CARICOM, said it had noted the concerns of bank customers and governments across the region regarding the proposed acquisition of Scotiabank by Trinidadian banking conglomerate Republic Financial Holdings Ltd. (RFHL).
Scotiabank announced on November 28 that it intends to sell banking assets in Anguilla, Antigua and Barbuda, Dominica, Grenada, Guyana, St Kitts and Nevis, St Lucia, St Maarten, and St Vincent and the Grenadines to RFHL for US$123 million. It also said its Scotia Life Insurance business in Jamaica and Trinidad and Tobago would go to a new company, 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 said in the statement, adding that the deals also underscored the need for strong national and regional competition rules and frameworks.
“Despite the need for these regulatory tools, the Commission stands ready to support the Member States of the CSME [CARICOM Single Market and Economy] and financial sector regulators in analyzing the competition effects of the proposed acquisitions in their respective national or sub-regional jurisdictions.
“As always, the Commission remains committed to a process that is fair and transparent in the determination of any regulatory matter where the interests of both business and consumers must be considered,” Justice Blackman added.
Both of Scotiabank’s banking and insurance transactions are subject to regulatory approval, but it is the proposed bank sale that has raised alarm in some of the countries that will be affected by that move.
The Antigua and Barbuda government says it has advised the Eastern Caribbean Central Bank (ECCB) – which has regulatory responsibility for banks operating in Antigua and Barbuda’s domestic financial space – that it will not be issuing a vesting order to facilitate the bank’s divestment of its Antigua holdings to FHL.
Guyana, meantime, said the proposed sales agreement raises a number of issues for the banking sector and the public which the Finance Ministry, the Bank of Guyana and the Government will need to carefully consider, given that Republic Bank currently holds 35.4 per cent of the banking system’s assets and 36.8 per cent of deposits and the acquisition would increase that to 51 per cent of both assets and deposits.
However, Scotiabank has defended its decision, insisting that the Caribbean is very important to its overall operations, and that even after the transactions in the nine countries it will still be servicing 90 per cent of the region.