(The Financial Post) The Bank of Nova Scotia has scrapped the sale of its holdings in two Caribbean countries and will continue to run the operations for the time being after running into regulatory and political pushback.
Scotiabank announced Friday that it had completed the sale of banking operations in seven “non-core” Caribbean markets — including Anguilla, Dominica and Grenada — to Trinidad and Tobago-based Republic Financial Holdings Ltd.
However, when the deal was first announced in November, 2018, it involved operations in nine countries.
“As a result of the decision communicated by the (Eastern Caribbean Central Bank) and the Bank of Guyana, the sale of Scotiabank’s operations in Antigua and Guyana to Republic Bank will not move forward at this time,” a Scotiabank spokesperson told the Financial Post in an email Monday.
“We will continue to operate business as usual, with a focus on serving our customers and on the best long-term solution for our employees and customers.”
The approximately US$123-million transaction between Scotiabank and Republic Financial was reviewed by the Eastern Caribbean Central Bank, which announced in September that it had approved the sale of assets in six of the countries. It did not, however, announce approval for Antigua, for which it is the monetary authority, but where the local government opposed and refused to sign off on the deal. Instead, the Antiguan government said it was interested in buying the island’s Scotiabank holdings itself alongside a local consortium.
“Please be assured that my Government will insist on the most scrupulous attention to the interests of employees and depositors should (Scotiabank) decide to close rather than to sell to Antiguans and Barbudans from whose transactions the Bank made its considerable profits,” Antigua and Barbuda Prime Minister Gaston Browne said in an August letter to a Scotiabank executive, which was shared with the Financial Post.
Guyana’s central bank likewise blocked the sale, due to concerns it would give Republic, which already held more than a third of all deposits in the country, too much of the market.
Scotiabank’s Caribbean sale was part of a campaign by the lender to reduce risk and focus its efforts on markets that could move the needle. That campaign has seen Scotiabank exit or announce plans to exit 20 countries over the past four years.
When the Caribbean sales were first announced, the bank said they were not financially material, but would increase a key capital ratio by around 10 basis points.
“This transaction supports the Bank’s strategic decision to focus on operations across its international footprint, where it can achieve greater scale and deliver the best value for customers,” a press release said Friday.