When First Cit­i­zens an­nounced on Thurs­day, via le­gal no­tice, that the Pur­chase and Sale Agree­ment be­tween First Cit­i­zens Lim­it­ed and the Bank of No­va Sco­tia for the sale of Sco­tia­bank’s re­tail op­er­a­tions in Guyana ex­pired and the agree­ment was ter­mi­nat­ed, there was a slight case of de­ja-vu.

It marked the sec­ond time in three years that a planned deal from Sco­tia­bank Guyana and a Trinidad and To­ba­go bank had fall­en through.

In 2019, Re­pub­lic Bank had at­tempt­ed to do the same thing, pur­chase Sco­tia­bank Guyana.

How­ev­er the rea­son for that sale be­ing blocked was made clear, as the Bank of Guyana de­nied the trans­ac­tion based on a con­cern that Re­pub­lic Bank would ob­tain a near mo­nop­oly po­si­tion in the Guyanese bank­ing sec­tor.

“What has hap­pened is Re­pub­lic bank had made an at­tempt to buy Sco­tia Bank Guyana and like any reg­u­la­tor, in any ju­ris­dic­tion any­where in the world, if a bank is then go­ing to, if the ac­qui­si­tion of a bank is go­ing to cre­ate a mo­nop­oly or some­thing that can be detri­men­tal to the de­pos­i­to­ry in­sti­tu­tions, then you will have a prob­lem,” said Tim­o­thy Tuck­er, pres­i­dent of the George­town Cham­ber of Com­merce & In­dus­try, “If the Re­pub­lic bank, Sco­tia Bank merg­er was done, it would have over 50% of the de­pos­i­to­ry.... So that is why that deal was re­ject­ed.”

The First Cit­i­zens, Sco­tia Guyana deal how­ev­er re­ceived back­lash from reg­u­la­tors from the time it had been an­nounced by the Cana­di­an bank in March 2021.

Both Guyana’s Min­is­ter of Fi­nance Dr Ash­ni Singh and the Bank of Guyana  crit­i­cised the an­nounce­ment of the sale by Sco­tia­bank last year.

Min­is­ter Singh  said back then that Sco­tia­bank’s an­nounce­ment  was “pre­ma­ture and in­ap­pro­pri­ate” while the Bank of Guyana said FCB “en­tered the said agree­ment with­out in­form­ing the BOG.”
The of­fi­cial rea­son for the lapse of the deal has not been made pub­lic, and at­tempts to con­tact Dr Singh were un­suc­cess­ful as he was said to be out of of­fice to at­tend an out­reach in an­oth­er re­gion of the coun­try.

How­ev­er Tuck­er ex­plained the pri­vate sec­tor was both sur­prised and con­cerned about the deal when it was an­nounced last year.

“One of the lo­cal in­sti­tu­tions in Guyana, the Bank for Trade and In­dus­try had placed an of­fer for Sco­tia­bank, which was high­er than the First Cit­i­zens of­fer and Sco­tia Bank went with First Cit­i­zens. I’m not cer­tain why that hap­pened. But again, you would have two Trinidad banks con­trol­ling over 50% of the de­pos­i­to­ry in­sti­tu­tions with­in Guyana,” he said.

This, he said, cre­at­ed alarms around the busi­ness com­mu­ni­ty as they were wary of such an arrange­ment fol­low­ing the col­lapse of CLI­CO and CL Fi­nan­cial in 2009 and the shock­waves it sent across Guyana and the re­gion.

“The en­tire re­gion suf­fered when CLI­CO col­lapsed and CL Fi­nan­cial col­lapse. There were a num­ber of in­sti­tu­tions, a num­ber of busi­ness peo­ple, es­pe­cial­ly in Guyana who lost con­sid­er­able amount of mon­ey,” said Tuck­er.

He how­ev­er rub­bished the pos­si­bil­i­ty that Trinidad and To­ba­go banks were black­list­ed, as he point­ed out the Re­pub­lic Bank re­mained the largest bank in the South Amer­i­can coun­try.

“I can tell you that is not so. There’s noth­ing pre­vent­ing Trinidad and To­ba­go bankers from en­ter­ing the Guyana mar­ket be­cause the largest bank in Guyana is a Trinidad and To­ba­go bank, Re­pub­lic Bank, which had bought one of the gov­ern­ment banks pre­vi­ous­ly, so there’s noth­ing pre­vent­ing (them),” he said.

While he could not give a rea­son for the FCB Sco­tia deal’s col­lapse, he did note that there had been a sig­nif­i­cant hold up in bank li­cense ap­provals in re­cent years.

“There is a long list of bank­ing li­cens­es wait­ing to be ap­proved. There are over sev­en li­cens­es pend­ing with the reg­u­la­tors in Guyana. So I don’t know if that merg­er or that pur­chase was at the back of that line and that caused it to take so long be­cause there’s been a num­ber of fi­nan­cial in­sti­tu­tions try­ing to get in­to the Guyana mar­ket for over for a num­ber of years and we know at least sev­en ap­pli­ca­tions are in,” he said.

Tuck­er said he would ac­tu­al­ly wel­come more Trinidad and To­ba­go banks in Guyana as he felt there were too few bank­ing in­sti­tu­tions in Guyana cur­rent­ly. How­ev­er he ex­plained the banks should en­ter in­de­pen­dent­ly and not at the ex­pense of for­eign bank like Sco­tia.

“So the lo­cal pri­vate sec­tor, while we are ad­vo­cat­ing hard for our more fi­nan­cial in­sti­tu­tions, we don’t mind First Cit­i­zens ap­ply­ing for bank­ing li­cense and com­ing in as a re­gion­al bank, but when we are go­ing to lose one of our in­ter­na­tion­al banks to a re­gion­al bank, the busi­ness sec­tor has a prob­lem with that,” he said,” We  don’t con­trol the process. Even if we have a prob­lem with that it’s a free cap­i­tal mar­ket. Com­pa­nies are free to sell to whom ever they choose to sell we sup­port that. But at the same time, we are wor­ried about the con­cen­tra­tion of our de­pos­i­to­ry in­sti­tu­tions  in­to the re­gion alone. This isn’t go­ing for Trinidad banks it goes for if a bank from Ja­maica came to buy Sco­tia­bank. We would fun­da­men­tal­ly have an is­sue with it,”

In their an­nounce­ment, First Cit­i­zens Bank said it would con­tin­ue to pur­sue “ge­o­graph­ic di­ver­si­fi­ca­tion and dig­i­tal trans­for­ma­tion strate­gies.”

Tuck­er said he hoped the bank would make an­oth­er at­tempt to come to Guyana as he stressed, “There’s a dire need for more banks in Guyana, there’s a need for more fi­nan­cial in­stru­ments to build a lo­cal pri­vate sec­tor. The lo­cal pri­vate sec­tor has an is­sue, a se­vere and very bois­ter­ous is­sue with ac­cess to fi­nance and the cost of fi­nanc­ing in Guyana.”

Tuck­er said cur­rent­ly sev­er­al busi­ness­men in Guyana opt to come to Trinidad in or­der to seek fi­nanc­ing.

“Lots of our lo­cal busi­ness­men ac­tu­al­ly go to Trinidad to fi­nance ma­jor projects in Guyana be­cause of the low in­ter­est rates, so it is just the con­cen­tra­tion of the of the bank­ing sec­tor and of course the lack of di­ver­si­ty is one of the is­sues that we have,” said Tuck­er who said the cur­rent state bank­ing in Guyana was not help­ful to the busi­ness sec­tor, par­tic­u­lar­ly small busi­ness own­ers.

“They are very risk averse. They they refuse to sup­port the small and medi­um sized busi­ness­es. And we have iden­ti­fied that it is dif­fi­cult for small and medi­um sized busi­ness­es to ac­cess fi­nance, and it shows. The bank­ing sec­tor here, they’ve been com­fort­able with mort­gages and lend­ing to ma­jor cor­po­ra­tions and charg­ing fees ver­sus re­al­ly tak­ing the risk and sup­port­ing the growth of small and medi­um sized busi­ness­es,” he said.

 Tuck­er hope­ful this would change giv­en the de­vel­op­ment on­go­ing in Guyana cur­rent­ly.