India’s leading public sector bank, the Bank of Baroda, has commenced steps to sell its Guyana operations, but the Government here said it is not surprised since the cost of keeping up with anti-money laundering requirements and regulations may have dented their income.
“It is a pattern” where various factors laws, including Anti-Money Laundering regulations “that they have to meet may have been eating into their profits,” Finance Minister Winston Jordan told the News Room Friday afternoon.
“This doesn’t come as a surprise, because since April they signalled that they would be closing shop in Guyana,” he stated.
The Bank is currently seeking an investment banker to help it find a buyer and has asked for technical and financial proposals by the end of this year.
“They see the cost to do business in these areas far more than the gains that they actually make,” Jordan stated.
He said Bank of Baroda’s exit from Guyana is an opportunity for other banks which wish to enter the market or other local banks and investors who could step in, “because, after all, you are talking about a country with 5 billion barrels of oil…and I don’t see banks staying out of Guyana in the near future.”
“We’re sad to see them go, but as I said it is as the world turns,” Jordan added.
The Bank’s authorised capital at the end of September this year was G$750 million, with 100% of capital contributing being from the parent bank.
As at September 30, 2018, the Bank’s total assets amounted to G$12.84 billion.
The news comes following last month’s announcement by Scotia Bank that it was selling its Guyana operations to Republic Financial Holdings Limited with which it had completed a deal to also sell operations in eight other Caribbean states.
Bank of Baroda started operations in Guyana on March 31, 1966, shortly before the country gained independence.
In the 70s, a branch was opened in New Amsterdam but was closed in 1987.
On May 23, 1999, the Bank was converted
The local operations were expanded with the opening of a branch at Mon Repos, East Coast Demerara in 2002.
The Bank’s other wholly owned subsidiary in the Caribbean is in Trinidad.
The government here had expressed worry about Republic’s acquisition of Scotiabank’s operations.
“We can curb the transaction from happening if it’s going to violate any law as it relates to concentration and so on, we will say ‘no’,” the Finance Minister had told the News Room.
Concentration is a case where a relatively small number of firms account for a relatively large percentage of the market.
The Finance Ministry had reported that Republic Bank would end up owning more than 50% of the total banking assets in Guyana if ittakes over Scotiabank’s operations.
Minister Jordan could not say specifically which section of the FIA would be breached, but he noted that this would be discovered during a due diligence process which will be conducted after a formal application for acquisition is made by the banks.
However, since the announcement was made by the banks, the financial institutions have not formally written the country’s regulators, Minister Jordan said.
Mr Jordan had explained that if the laws block theRepublic/Scotiabank business deal, an alternative transaction is for Scotiabank to sell its assets to other financial institutions.