Published On: Mon, Dec 3rd, 2018

Scotiabank to pull out of nine Caribbean countries in major regional shake-up

Scotiabank-cp_largeThe Bank of Nova Scotia on Tuesday (November 27) announced that it has struck a deal to sell its banking assets in nine Caribbean countries – but not the TCI.
This comes as the lender continues to narrow down the number of international markets in which it operates.
It agreed to sell its operations in Anguilla, Antigua, Dominica, Grenada, Guyana, St Kitts and Nevis, St Lucia, St Maarten, and St Vincent and the Grenadines.
The recent report further stated that larger markets in Latin America are still very much part of its plans.
The massive downsizing comes although the bank’s profit from its international banking unit grew at a greater rate than that of its Canadian business over the past year.
Canada’s third-biggest lender reported adjusted earnings per share of $1.77 in the quarter ended October 31, compared with $1.65 a year ago.
Scotiabank president and CEO Brian Porter who announced the bank’s intentions to exit more than 20 countries globally noted that: "Exiting these non-core operations is consistent with a strategy that began five years ago to sharpen our focus, increase scale in core geographies and businesses, improve earnings quality and reduce risk to the bank.”
Trinidad and Tobago-based Republic Financial Holdings (RFHL) has already announced its intention to acquire Scotiabank’s Caribbean businesses.
Republic Financial Holdings, which is the parent company for Republic Bank, said in a press release on Tuesday (November 27) that the purchase price is $123 million.
The $123 million represents a $25 million consideration for the total shareholding of Scotiabank Anguilla and a premium of $98 million over net asset value for operations in the remaining eight countries.
This price does not include any amounts required to capitalise the branches post-closing according to Ronald F deC Harford, chairman of RFHL, who said: "This acquisition represents another major milestone for the Republic Group.
"As we grow and acquire significant positions in our existing markets, it is important that we continue to broaden our footprint, regionally and internationally.
"This agreement, which is subject to all regulatory approvals, affords us the opportunity to reach more clients in the Eastern Caribbean and Guyana, two markets we are familiar with, and build new relationships in St Maarten.
"We are confident that our expanded presence or entrance in those markets will redound to the benefit of Scotiabank’s clients and employees as well as Republic’s existing stakeholders.”
Additionally, Scotiabank announced Tuesday that its subsidiaries in Jamaica and Trinidad and Tobago have agreed to sell their insurance operations to Barbados-based Sagicor Financial Corporation, which would also underwrite insurance products for Scotiabank’s banking subsidiaries through a 20-year distribution agreement.
Scotiabank said these transactions would not be material, but that they would increase its common equity tier one capital ratio, a measure of financial strength, by around 10 basis points when they close.
"Due to increasing regulatory complexity and the need for continued investment in technology to support our regulatory requirements, we made the decision to focus the bank’s efforts on those markets with significant scale in which we can make the greatest difference for our customers,” said Ignacio Deschamps, the head of international banking at Scotiabank.
The bank also closed its Grand Turk and Grace Bay branches earlier this year as part of a scheme to "consolidate” its facilities.
This move led to the implementation of a banking facility which houses more services under one roof at the head office at ScotiaCentre on Cherokee Road in Providenciales.
Back in June 2018 Premier Sharlene Cartwright Robinson said the decision was "rather unfortunate” and "could not come at a worse time” for the territory.
Although the Government had expressed concerns about the staff and customers with hopes of being able to "avert” the changes the bank’s decision was final.
The head office, which currently houses the retail branch, corporate and commercial banking and the managing director’s offices, will become the new home for the full suite of services by year end.
Scotiabank has been on a bit of an acquisition binge over the past year, expanding its wealth management operations as well as in Latin America, where it is forecasting that growth in some countries will outpace Canada.
The bank has operated in the Caribbean since 1889 plan to refocus its business in the region by selling a number of insurance and banking operations.

Click Tag(s) for Related Articles:



-- ADVERTISEMENT --