(GUYANA CHRONICLE) — The Central Bank has denied Republic Bank Financial Holdings (RBFH) plans to take over the operations of Scotiabank in Guyana, Dr Gobind Ganga has confirmed.
Dr Ganga, the Central Bank Governor, told the Guyana Chronicle on Tuesday night that both of the banks were informed of the decision. He said that the denial of the application for takeover by RBFH branded as Republic Bank was due largely to the high level of concentration of the banking system, noting that “it would lead to systemic issues” which would have affected the health of the financial system here.
Dr Ganga explained that the move would have led to lower cost efficiency, adding that it would have stymied competition in the sector here. He said Republic Bank would have had over 50% assets and deposits in the local sector adding that it would have raised “major concerns” such as impact on competition.
Both banks have done very well in Guyana, Dr Ganga said. He said the Republic Bank has played “a very good role in Guyana and this is why they would have wanted to advance their footprint.” However, he reiterated that the planned move would have had an adverse impact on the banking system.
He said Scotiabank is free to sell their operations and with the evolving oil and gas industry here, it can take advantage of the opportunities which lay ahead. In November 2018, Bank of Nova Scotia (BNS.TO) trading as Scotiabank, reported that fourth-quarter earnings were marginally below expectations and said it planned to exit nine countries in the Caribbean as part of a shake-up of that business.
Scotiabank said it planned to sell its banking operations in Anguilla, Antigua, Dominica, Grenada, Guyana, St Kitts & Nevis, St Lucia, St Maarten, St Vincent & the Grenadines to Republic Financial Holdings.
In a statement subsequent to the announcement, Guyana’s Ministry of Finance frowned on the move. It said Republic Bank currently held 35.4 per cent of the banking systems assets and 36.8 per cent of deposits in Guyana and the acquisition of Scotiabank would up this to 51 per cent of both assets and deposits.
“This too will have an impact on competition and the potential for Republic Bank to have too much influence on pricing of banking products and rates. The sale will also have an impact on issues related to correspondent banking options and the loss of jobs with Republic Bank likely to consolidate branches,” the Finance Ministry said.
Earlier this month, the Eastern Caribbean Central Bank (ECCB), in consultation with the ECCB Monetary Council, approved the application for the transfer of the assets and liabilities of the Bank of Nova Scotia to the Republic Financial Holding Limited in several regional territories.
According to a release, the Trinidad and Tobago-based bank received the green light to take control of the operations of Scotiabank in Anguilla, the Commonwealth of Dominica, Grenada, St Kitts and Nevis, Saint Lucia and St Vincent and the Grenadines, pursuant to Section 43 of the Banking Act.
Discussions on the future of Scotiabank’s operations in Antigua and Barbuda are ongoing, the release said.