Scotiabank’s exit from Guyana under assessment – Min. Harmon
– govt still to make determination
– govt concerned about loss of jobs due to consolidation of branches, effect on competition
– Financial Institutions Act requires approval by the Bank of Guyana following the submission of an application and due diligence
DPI, Guyana, Friday, November 30, 2018
The recent move by Scotiabank to sell its operations to Republic Bank is being assessed by the government. This is according to Minister of State, Joseph Harmon. Asked about the government’s position at today’s post-Cabinet press briefing, he reminded that Finance Minister, Winston Jordan recently issued a comprehensive statement on the issue.
Referring the move by Antigua, Minister Harmon noted that a similar move would not be granted permission. He said that each country has its own peculiarities.
“While Scotiabank is in all these countries, the situation in Guyana is not the same… What Minister Jordan has said is that the proposal, which has come out, is for Republic Bank, in buying out the ownership of Scotiabank in Guyana, to actually own 51 percent or 53 percent of the banking services in this country and that is unacceptable.”
The Minister of State said that the government will determine what is in Guyana’s best interest.
“I believe the statement made by the Prime Minister of Antigua and Barbuda is a good statement. It deals with his situation. Our Minister of Finance has made a statement also, on the matter here, and I believe we are going to assess the situation and we will make a determination as to how it affects us here.”
Minister Jordan, in a statement on Tuesday last, said the agreement which sees Republic Bank taking ownership of Scotiabank, raises a number of issues for the banking sector in Guyana and for the public which the Finance Ministry, the Bank of Guyana and the Government of Guyana will need to carefully consider.
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 will up this to 51 per cent of both assets and deposits. This raises concerns about an over-concentration of banking services, market domination and the ‘too big to fail’ risks.
The statement also noted that “The Scotiabank decision is made when Guyana’s economy is on the cusp of financial transformation with the onset of a massive new oil and gas sector raises concerns and is regretted.
Among other concerns is the effect on competition and the potential for Republic Bank to have too much influence on the pricing of banking products and rates, issues related to correspondent banking options and loss of jobs as a result of Republic Bank consolidating branches were other concerns.”
The ministry has pointed to the Financial Institutions Act (FIA), which has clear stipulations regarding ‘acquisition of control’ and requires approval by the Bank of Guyana following the submission of an application and due diligence being conducted.
The FIA also addresses the issue of ‘fundamental changes’ as it relates to mergers and transfer of assets or liabilities.
The Finance Ministry emphasised that the announcement is not Guyana-specific but is part of a region-wide refocusing by Scotiabank.
The public is being assured that the ministry will continue to stay abreast with the matter and will act in the best interest of the citizenry and issue updates as necessary.
Paul Mc Adam.
Image: Department of Public Information.