The Prime Minister of Antigua and Barbuda is reiterating the government’s position that the directors of Scotiabank will not be receiving a vesting order to facilitate the sale of its local business in the country, unless a consortium of local banks is given the first right of refusal to acquire the bank’s operation in the country.
Gaston Browne issued the threat Monday during a ceremony at the VC Bird Bust on Market Street, while noting that his administration is not afraid of any legal action which may be mounted by the directors of the financial institution. The Canadian based Bank of Nova Scotia has been operating in Antigua and Barbuda for more than 50 years. “We will not be issuing the vesting order unless we get a deal that is satisfactory to us. In that case they will have to go to court because we will not voluntarily do it,” Browne said.
He further explained that, “We are doing so to ensure that we can get a piece of the pie to build resilience within the indigenous banking sector to make our banks stronger. One of the reasons why our bank is not stronger is because we don’t have the type of economies of scale, the size and the scope”. Over a week ago, the bank informed regional government officials and its customers that it would be selling its operations in Antigua and Barbuda, Anguilla, Dominica, Grenada, Guyana, St Kitts & Nevis, St Lucia, St Maarten, and St Vincent and the Grenadines to the Trinidad-based Republic Financial Holdings Limited for US $123 million. Scotiabank said the decision to divest “these non-core operations” was due to increasing regulatory complexity and the need for continued investment in technology to support its regulatory requirements.
The deal between the bank and Republic Financial was made on November 27, and both entities said the sale was subject to “all regulatory and other customary approvals and conditions”. Since the announcement of the sale, governments across the region have expressed concern about the implications on the local workforce. The news also prompted a response from the Eastern Caribbean Central Bank (ECCB) which is urging citizens and residents in the Eastern Caribbean Currency Union (ECCU) to remain calm and stay abreast of developments in the banking sector.
The ECCB, which has regulatory authority over the ECCU territories and is charged with maintaining monetary and financial stability in member states, also confirmed that it received an application on November 27 from Republic Financial Holdings seeking regulatory approval to acquire the Bank of Nova Scotia’s operations and businesses in the ECCU. Meanwhile, the country’s leader has also stated that the government would not be held accountable if there is a run on the bank by anxious customers. “What if there is a run on the bank? Whose problem is it? It will be the problem of Scotia Canada who will have to spend millions of dollars to fix the problem. If Scotiabank fails to provide some form of local participation then whatever happens to the branches here and the Caribbean is their problem,” Browne declared.