Central Bank denies Republic Bank’s application

first_imgScotiabank takeoverRepublic Financial Holdings Limited, the parent company of Republic Bank (Guyana), has not been granted permission by the Central Bank of Guyana for the purchase/acquisition of the operations of Scotiabank in Guyana.Governor at Central Bank of Guyana, Dr Gobind GangaThis was revealed by Governor at the Central Bank of Guyana, Dr Gobind Ganga, who told Guyana Times on Tuesday that the application was denied in light of concerns about “concentration” and “competition” which would have negative impacts on the country’s financial system.He stated that both banks were notified on Tuesday about the Central Bank of Guyana’s evaluation and position on this matter.“…to tell more specifically Republic Bank that we could not approve their application for the merger or acquisition of the assets because of a number of factors. But largely it would be the high level of concentration in the financial and/or banking system that would have had an impact on the health of the financial system with respect to systemic risks. In addition, with respect to cost because it would have led to lower cost efficiency meaning that competition would have been affected,” Ganga told this publication.According to Dr Ganga, had Republic Bank (Guyana) been allowed to forge ahead with its planned takeover of Scotiabank’s operations here then this would have resulted in systemic effects.“Meaning it could cause things happening in the financial system which we could not control…we would have indicated to Scotiabank that we don’t have a problem in terms of the bank wanting to sell but we would have liked for them to look into the areas where you would not have the concentration and you have a proper, potential buyer,” he added.Meanwhile, a senior financial and banking expert told this publication that it would be “preferable” if Scotiabank sells its operations to an international bank.“With oil and gas coming in, international banks are seeing more opportunities here and there are some of them that are doing due diligence,” the banking expert noted.In late November 2018, after the proposed buyout was announced, Opposition Leader Bharrat Jagdeo had stated that Republic Bank Limited’s acquisition of Scotiabank’s operations in Guyana could be unhealthy for the local financial sector.“From what I’ve seen – the figures that I’ve read about – is that the merged entity could control more than 50 per cent of our total assets in the banking sector and more than 50 per cent of total deposits. This is unhealthy and therefore I will support our regulators to uphold the law to avoid undue concentration in a single entity, which puts our entire financial system at risk,” the Opposition Leader stated.His statements came on the heels of the Canadian-based Scotiabank announcing that it has signed an agreement to sell its banking operations in Guyana and eight other Caribbean nations to Republic Financial Holdings Limited.last_img read more