The Caribbean Association of Banks’ Position on Republic Bank’s proposed buyout of Scotiabank’s Banking Operations

[dropcap]T[/dropcap]he Caribbean Association of Banks (CAB) has noted the concerns of the public and private sectors with respect to the proposed sale of Scotiabank’s banking operations in nine (9) Caribbean Countries to Republic Financial Holdings Limited (RFHL). While some of these concerns may be well founded, the CAB views this development as a positive opportunity for the regional financial services sector. The region has, in its history, experienced migration, acquisition and consolidation of both locally owned and international financial services companies. Despite these situations, the sector has continued to be stable, guaranteeing customers the same high standards of integrity and customer service they expect from their banks.

The CAB is of the opinion that the ability of RFHL to be positioned to acquire assets of one of the leading international banks, despite the myriad of challenges facing the regional banking sector at this time, is to be commended. This is a true reflection of the ongoing maturity of the financial services sector in the Caribbean. To this end, we applaud RFHL for its confidence in the region and sector. RFHL has been in operation since 1837, originally formed under the name Colonial Bank in Trinidad and Tobago. Today the institution operates in 15 subsidiaries with over 4,000 employees in Trinidad, Grenada, Barbados and Guyana and an off-shore Corporation in the Cayman Islands. RFHL also operates in Suriname with approximately 5,500 employees within the group. In 2013 RFHL made history as the first Caribbean Bank to conduct business on the African continent through an acquisition of a 40% stake in the HFC Bank in Ghana.

The bank has confirmed its desire to purchase the operations of Scotiabank in the nine territories (Guyana, St Maarten, Anguilla, Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, Saint Lucia, and St Vincent and the Grenadines), for USD$123 million — subject to the necessary regulatory and legal approvals. The decision made by Scotiabank to refocus their investment options into bigger markets, to take advantage of economies of scale, further underpins the need for our indigenous banks to come together to strengthen their position in order to remain viable and competitive in this ever-changing global economic market. We must recall the late Sir Dwight Venner’s efforts in highlighting the need for rationalization of the financial sector within the ECCU. The ECCU eight-point Stabilization and Growth Programme, developed in 2009, advocated for the amalgamation of indigenous banks to drive economies of scale and scope, efficiencies in operations and increased opportunities for a more diverse state-of-the-art banking operation. This was further emphasized in the June 2018 ECCB’s Consultative Paper on consolidation of national banks in the ECCU. Given the challenges in the global financial sector, mergers and acquisitions will continue to be the norm and regional banks should position themselves to take advantage of the opportunities as we operationalize the CSME.

The CAB believes that we must place reliance and trust in the mechanisms which regulators and governments will employ to preserve the financial integrity of the regional financial services industry and the growth and development of our economies. A press release from the ECCB on Dec 1, 2018 states, “From time to time, there will be changes in ownership of banks. Indeed, the proposed transaction is the latest in a series of consolidation moves by the Canadian banks. It is distinctly possible that there could also be some consolidation activity among indigenous (national) banks. Citizens and residents in the region should come to expect these developments as part of the banks’ response to both global developments and competition in the ECCU Banking space.”