Prime Minister Dean Barrow says the proposed acquisition of the Scotiabank Belize by the Caribbean Investment Holdings Limited (CIHL), the parent company for the Belize Bank Ltd (BBL), could put the BBL in a dominant position here.
CIHL announced last week that it is moving to acquire the Scotiabank Belize pending final regulatory approval. The sale is part of a regional refocusing by the Canadian bank and the transaction is in excess of US$30 million.
“One of the strategic goals of the Belize Bank for quite a while has been to expand our regional operation and to become a regional banking franchise. So it has been a number of years now in which we have been looking at acquisitions across the Caribbean,” said Lyndon Guiseppi, BBL’s executive chairman.
CIHL has agreed to pay up to US$30.5 million for the acquisition of Scotiabank Belize, which includes shareholder equity of US$28.5 million and a premium of US$1.5 million.
But speaking at a virtual news conference, Prime Minister Barrow, who is also minister of finance, said “if this proposed acquisition is to be approved by the Central Bank of Belize, whose jurisdiction it is, it would put the Belize Bank in a dominant position”.
He told reporters that his understanding is that this deal has not been consummated and that the central bank has to give ultimate regulatory approval before there can be any finalisation of the acquisition.
“…if this proposed acquisition is to be approved by the Central Bank of Belize, whose jurisdiction it is, it would put the Belize Bank in a dominant position…”— Prime Minister of Belize Dean Barrow
Barrow said he wanted to be careful in his statements about the acquisition since he did not want to appear to be “personalising what is in fact an extremely consequential, critical issue and a process that the central bank will have to demonstrate that it has carried out in terms of the scrutiny before it can give approval, that the central bank will have to prove to people that it has done in a completely thorough-going and professional way.
“Confidence is so important in our financial sector that I must be scrupulous in trying to guard my words. You know the Belize Bank and Scotiabank Ltd, as far as I have been able to determine, as of December 31st, 2019, held 47 per cent of commercial bank loans.”
Barrow said that the Belize Bank and Scotiabank Ltd retained 50 per cent of assets as well as 48 per cent of deposits.
He said the two banks have 57 per cent of current year’s profits.
“Belize Bank and Scotiabank Ltd, 60 per cent of equity. Belize Bank and Scotiabank Ltd, 76 per cent of quarterly net income. Belize Banks weighted average lending rate from what I saw is 20 per cent higher than Atlantic Bank Ltd, for example,” he added.
Barrow has in the past said that Government cannot interfere in the functions of the regulator, but has indicated he would be meeting with the central bank board members as it pertains to the Scotiabank acquisition.
“Now, Government has to weigh in on this matter,” he said, noting, “I have every faith in the regulator, in the central bank and the governor, but somebody had suggested to me, ‘Well, this was an offshore transaction and the way it was done with clever lawyers trying to fix the structure in a way as to try to make it intact, try to make it unassailable by the regulator must mean that there is not too much the regulator can do.’
“I can’t claim to have gone over the powers of the regulator in any great detail, but one thing struck me: if the regulator is the entity to grant approval for the final consummation of this deal, that must mean if you can grant approval, inherent in that is that you can withhold approval.
“So all I am saying is that the public — and I see now there are beginning to be statements made. I noted very carefully what the chamber of commerce had to say. I have had phone calls from various interested persons, I just want to offer again the assurance that this is not a done deal and that the concerns that a lot of people in the business community, in the banking community apparently have are not concerns that can be swept under the rug,” Barrow added.
He reiterated that he had faith in the regulator to do all that is necessary to ensure that before any final approval is given, the regulator would be able to demonstrate to the public that that approval is ultimately in the interest of the sector and of the country.
“Government does not give instructions to the central bank with respect to something like this, but there is a central bank board a majority of which is appointed by the Minister of Finance, you can be assured that apart from the faith that I naturally have in the governor I will also, not just by way of what I am saying publicly today, but by way of a personal interaction with the board try to make absolutely sure that this thing is handled with the complete thoroughness that it deserves given all that is at stake,” Barrow added.
Last September, the St Kitts-based Eastern Caribbean Central Bank (ECCB) said it had approved the sale of Scotiabank in six Eastern Caribbean countries to the Trinidad-based Republic Financial Holding Limited (RFHL) and that discussions were continuing between the Canadian bank and the Antigua and Barbuda Government.
The ECCB said it had approved the application for the transfer of the assets and liabilities to RFHL in Anguilla, Dominica, Grenada, St Kitts–Nevis, St Lucia, and St Vincent and the Grenadines.