Unfair competition and loss of jobs are just some of the concerns expressed by the Guyana Government in response to the takeover of Scotiabank’s local operations by Republic Financial Holdings Limited (RFHL), the parent company of the Republic Bank.
The Guyana Government says the move is “regretted”.
RFHL announced Tuesday morning that it reached an agreement with the Canadian multinational bank, whereby it will be taking over its operations in nine Caribbean territories.
Chairman Ronald Harford said the agreement is in keeping with all regulatory and other customary approvals and conditions.
But Guyana’s Finance Ministry indicated that this is not the case.
In a statement issued Tuesday afternoon, the Ministry said: “the agreement raises a number of issues for the banking sector in Guyana and for the public which the Ministry of Finance, the Bank of Guyana and the Government of Guyana will need to carefully consider.”
These concerns are:
- Republic Bank currently holds 35.4% of the banking systems assets and 36.8% of deposits and the acquisition will up this to 51% of both assets and deposits. This raises concerns about an over-concentration of banking services, market domination and the ‘too big to fail’ risks
- Effect on competition and the potential for Republic Bank to have too much influence on pricing of banking products and rates.
- Issues related to correspondent banking options
- Loss of jobs with Republic Bank likely to consolidate branches.
The Ministry also pointed out that the Financial Institutions Act (FIA) has clear stipulations regarding ‘acquisition of control’ and requires approval of the Bank of Guyana following the submission of an application and due diligence being conducted.
It added that the FIA addresses as well the issue of ‘fundamental changes’ as it relates to mergers and transfer of assets or liabilities.
“The Scotiabank decision, which 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,” the Ministry said.
The Ministry of Finance said it will continue to stay abreast of this matter, will act in the best interest of the Guyanese people and will issue subsequent updates as necessary.