GEORGE­TOWN, Guyana, CMC – The Cen­tral Bank of Guyana (CBG) says it will not sanc­tion the sale of the op­er­a­tions of Sco­tia­bank here to the Trinidad-based Re­pub­lic Fi­nan­cial Hold­ing Lim­it­ed (RFHL).

Gov­er­nor of the Cen­tral Bank, Dr. Gob­in Gan­ga, has since com­mu­ni­cat­ed the CBG’s po­si­tion to the two banks, cit­ing a num­ber of con­cerns.

Fi­nance Min­is­ter Win­ston Jor­dan said that the Guyana gov­ern­ment had been made aware of the CBG’s po­si­tion “and al­so the let­ter that was writ­ten to me, in­di­cat­ing that hav­ing done their ex­am­i­na­tion and tak­ing all the cir­cum­stances in­to con­sid­er­a­tion that they [CBG] could not ap­prove the ap­pli­ca­tion.”

Jor­dan said that the mat­ter had been brought to the at­ten­tion of Cab­i­net on Tues­day, adding “Cab­i­net con­curred with the Gov­er­nor’s pro­nounce­ment and they agreed that the rea­sons giv­en were im­por­tant rea­sons and the crit­i­cal one be­ing con­cen­tra­tion, the risks in­volved and so on, AML/CFT [An­ti-Mon­ey Laun­der­ing and Com­bat­ing the Fi­nanc­ing of Ter­ror­ism] con­sid­er­a­tions, the lack of su­per­vi­so­ry ca­pac­i­ty by the bank it­self; they are now build­ing that ca­pac­i­ty and so on.

“So when you take all of that in­to con­sid­er­a­tion, we did not feel that this ap­pli­ca­tion would be in Guyana’s best in­ter­est,” he added.

Gan­ga said that a com­plete eval­u­a­tion of the takeover plan had been done and a de­ci­sion was made not to grant ap­proval to the pro­posed move. He said there were a num­ber of fac­tors that in­flu­enced the de­ci­sion, in­clud­ing com­pe­ti­tion and con­cen­tra­tion in the mar­ket.

Last No­vem­ber, the RFHL an­nounced that it was seek­ing to ac­quire Sco­tia­bank op­er­a­tions in Guyana, St. Maarten, An­guil­la, An­tigua and Bar­bu­da, Do­mini­ca, Grena­da, St. Kitts and Nevis, St. Lu­cia, and St. Vin­cent and the Grenadines.

The RFHL state­ment said that the pur­chase price is US$123 mil­lion, which rep­re­sents US$25 mil­lion con­sid­er­a­tion for to­tal share­hold­ing of Sco­tia­bank An­guil­la Lim­it­ed; and a pre­mi­um of US$98 mil­lion over net as­set val­ue for op­er­a­tions in the re­main­ing eight coun­tries.

An­tigua and Bar­bu­da and Guyana had ini­tial­ly ex­pressed reser­va­tions about the pro­posed ac­qui­si­tion, with St. John’s in­di­cat­ing that it would not be is­su­ing a vest­ing or­der to fa­cil­i­tate the move.

The St. Kitts-based East­ern Caribbean Cen­tral Bank (EC­CB) ear­li­er this month an­nounced that it had ap­proved the ap­pli­ca­tion for the trans­fer of the as­sets and li­a­bil­i­ties of the Bank of No­va Sco­tia (BNS) to the RHFL.

But the EC­CB, which serves as cen­tral bank for is­lands in the Or­gan­i­sa­tion of East­ern Caribbean States (OECS) said that re­gard­ing the fu­ture of Sco­tia­bank’s op­er­a­tions in An­tigua and Bar­bu­da, the dis­cus­sions are on­go­ing.

For its part, Guyana had raised con­cerns about the sale not­ing that with Re­pub­lic Bank cur­rent­ly hold­ing 35.4 per cent of the bank­ing sys­tems as­sets and 36.8 per cent of de­posits here, its ac­qui­si­tion of Sco­tia­bank would push its stake in the lo­cal bank­ing sec­tor to 51 per cent of both as­sets and de­posits.