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The Eastern Caribbean Central Bank in Basseterre, St Kitts-Nevis (File photo)

Proposed sale of Canadian banks in the Caribbean under review

The Eastern Caribbean Central Bank in Basseterre, St Kitts-Nevis (File photo)

Governor Timothy Antoine of the Eastern Caribbean Central Bank (ECCB) has confirmed that his organisation is reviewing applications for the intended sale of banking assets within the Eastern Caribbean Currency Union (ECCU) jurisdiction.

Governor Timothy Antoine of the Eastern Caribbean Central Bank

Governor Antoine spoke at a press briefing recently following the 95th Meeting of the ECCU Monetary Council at ECCB headquarters in Basseterre, St Kitts-Nevis. In November 2019, Canadian Imperial Bank of Commerce declared that it had agreed to sell two-thirds of its Caribbean banking unit, CIBC FirstCaribbean, to GNB Financial Group Ltd., a Cayman Islands-based company run by Colombian billionaire, Jaime Gilinski.

CIBC has been in the Caribbean since 1920, when the Canadian lender opened branches in Barbados and Jamaica. CIBC combined their regional operations with Barclays Plc in 2002 to create FirstCaribbean, and four years later bought the British bank’s 44 per cent stake. In December 2019, Royal Bank of Canada (RBC) announced its intention to sell its banking operations in the Eastern Caribbean to a consortium of indigenous banks, viz. 1st National Bank (St Lucia), Antigua Commercial Bank, National Bank of Dominica, Bank of Montserrat, and Bank of Nevis.

RBC sold its branches in more than half a dozen Caribbean territories.

The sale includes operations in Antigua and Barbuda, the Commonwealth of Dominica, Grenada, Montserrat, Saint Lucia, St Kitts-Nevis, and St Vincent and the Grenadines. RBC has operated in the Caribbean for over 100 years. Governor Antoine explained that both sets of applications are under review.

According to Antoine, “essentially I just want to confirm that we have now received applications from both CIBC/FCIB in respect of the sale of two thirds of FCIB to the Gilinski group, and we have also as of this week received a formal application from the indigenous banks which are proposing to purchase the RBC operations in the Eastern Caribbean. We are working with regulators across the region in respect of the first matter. As you know, the first matter (of FCIB) is not just a ECCU matter, it in fact is across the Caribbean. So Barbados is the lead regulator on this matter, but all central banks are involved.”

CIBC FirstCaribbean’s headquarters in Bridgetown, Barbados

He said there here has already been a college of regulators, that is to say a meeting of the bank supervisors on this issue that was held at the end of January, and the application is now being assessed. “In respect of the RBC operations, having received the application this week, we have now commenced our assessment of the application, and we will evaluate it on its merits,” the EEB Governor declared.

CIBC and RBC are the latest Canadian financial institutions to signal their intention to sell significant holdings in the Caribbean. In 2019, the Bank of Nova Scotia completed the sale of much of its stake in the Eastern Caribbean to the Trinidad and Tobago-based Republic Bank.

Republic Bank acquired seven of Scotiabank’s regional operations.

Governor Antoine indicated that the situation is one for which the ECCB had prepared itself.

He further suggested that the looming absence of the Canadian banks presents opportunities for domestic organisations to grow their scope, become more efficient, and strengthen their standing with international banks. The Governor explained, “In respect of the exodus of the Canadian banks, that has been foreshadowed for some time now. This is not a new development, and so the Council has taken this matter in stride. The position of the council, and certainly the Bank, has always been that in light of this development the additional responsibility does fall on our indigenous banks to take more of the load, as it were, in terms of the banking system in the ECCU. And a lot of the efforts have been to support our indigenous banks to be able to take that additional responsibility.”