The Ministry of Finance has indicated, that along with the Government and the Bank of Guyana, it will be carefully considering several issues that would be related to the move by Republic Bank to acquire Scotiabank, as announced earlier today by the two banks.
In a statement today, the Finance Ministry said the agreement raises a number of issues for the banking sector in Guyana and for the public.
According to the Finance Ministry, Republic Bank currently holds 35.4% of the banking systems assets and 36.8% of deposits in Guyana.
The acquisition of Scotiabank would up Republic Bank’s stake in the local banking sector to 51% of both assets and deposits.
The Finance Ministry said such an acquisition raises concerns about an over-concentration of banking services, market domination and the ‘too big to fail’ risks.
Additionally, there is the concern about the effect on competition and the potential for Republic Bank to have too much influence on pricing of banking products and rates.
The Finance Ministry has also indicated that the agreement would also raise some issues related to correspondent banking options and there could also be a loss of jobs as there could be a move to consolidate the branches.
According to the Finance Ministry, the Scotiabank decision, which comes at a time when Guyana’s economy is on the cusp of financial transformation with the onset of a massive new oil and gas sector, raises concerns and is regretted.
“The Ministry of Finance wishes to assure that it will continue to stay abreast of this matter, will act in the best interest of the Guyanese people and will issue subsequent updates as necessary”, the statement said.
The Ministry has emphasized that this move is not Guyana-specific and is part of a region-wide refocussing by Scotiabank.
The agreement, however, is “subject to all regulatory approvals”.
The Ministry reminded that the Financial Institutions Act (FIA) has clear stipulations regarding ‘acquisition of control’ and requires approval of the Bank of Guyana following the submission of an application and due diligence being conducted.