More than a week after announcing that it has agreed to sell its operations in Guyana to Trinidad-based First Citizens Bank Limited, Scotiabank is insisting that it has in no way breached any laws in Guyana.
This is according to Scotiabank’s Senior Vice President and Head of the South and East Caribbean, Stephen Bagnarol, in an article published by Trinidad and Tobago Newsday on Thursday.
On March 3, Scotiabank announced that “it has reached an agreement for the sale of its banking operations in Guyana to First Citizens Bank Limited”.
While the Canada-based multinational bank had said that the agreement was subject to regulatory approval and customary closing conditions, the Guyana Government had described the announcement of the sale as “premature and inappropriate”, since Scotiabank did not follow the necessary regulatory process for such transactions.
But Bagnarol, who is also Scotiabank TT Managing Director, told Trinidadian reporters following a virtual Annual General Meeting (AGM) on Wednesday that the financial institution did not breach any laws in Guyana.
“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,” Bagnarol posited.
The Scotiabank Senior VP and Head of the Caribbean South and East region went on to say that the sale was part of the Bank’s strategy, according to the Newsday article.
“This was part of the Bank’s 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,” he noted.
Meanwhile, Scotiabank TT Chairman Derek Hudson was also quoted in the article as saying that announcing the sale of the Bank’s Guyana operations before obtaining approval from local financial regulators was not premature as described by the Government.
Premature and unfortunate
Guyana’s Senior Minister with responsibility for Finance, Dr Ashni Singh had said last week that it was premature and unfortunate that the deal between Scotiabank and First Citizens was announced without the regulatory process to consider the request for such a transaction yet to be initiated, much less concluded.
In accordance with Section 12 of the Financial Institutions Act (FIA), Scotiabank needs permission from the Bank of Guyana (BoG) before it proceeds to enter into any agreement to sell its operations here.
Moreover, the BoG, which is the regulatory body for financial institutions in the country, said in a subsequent statement last week that First Citizens Bank has not even submitted an application in keeping with the requirements of the FIA 1995 to acquire control of Scotiabank’s operations in Guyana.
In fact, BoG Governor, Dr Gobind Ganga, had stated that the sale of Scotiabank’s operations in Guyana was subject to the approval of the central bank.
This, Dr Ganga explained, is to allow for the BoG to conduct the necessary mandatory assessments of the transaction – including, in this case, the company seeking to enter Guyana’s banking sector.
“Even if [First Citizens] submit an application in the near future, we have to do our assessments with respect to the requirements and those requirements include our objectives, in terms of what we need from another financial institution entering the Guyana market,” he pointed out.
Dr Ganga made reference to Scotiabank’s previous attempt to sell its operations in Guyana to Republic Financial Holdings Limited in 2019, which was halted after the BoG – having done its assessment – found that if the transaction had gone through with RBL, which is already operating in Guyana, it would have jeopardised the local market.
At the time, Dr Ganga explained that the application was denied in light of concerns about “concentration” and “competition”, which would have negative impacts on the country’s financial system.
Scotiabank’s Guyana operations currently encompass four branches and approximately 180 employees. The Canada-based bank noted that these employees would all be retained upon the transfer of operations to First Citizens.
Scotiabank has, for some time, been looking to sell its operations in Guyana.