New policy regarding sale of assets of international banks operating in Antigua

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The Antigua and Barbuda government has adopted a policy whereby any international bank deciding to leave the island will have to make “first offer to sell its holdings to a consortium of local banks”.

A government statement said that the policy had been discussed and agreed upon at the weekly Cabinet meeting and that “this policy decision applies to all international banks and certainly not to any single bank that may now be engaged in disposing of its holdings”.

Antigua and Barbuda has been seeking to acquire the operations of Scotiabank here after the Canadian financial outfit said it was disposing of some of its assets in several Caribbean islands.

Last November, the Trinidad-based Republic Financial Holding Limited (RFHL) announced that it was seeking to acquire Scotiabank operations in Guyana, St. Maarten, Anguilla, Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines.

The RFHL statement said that the purchase price is US$123 million, which represents US$25 million consideration for total shareholding of Scotiabank Anguilla Limited; and a premium of US$98 million over net asset value for operations in the remaining eight countries.

Antigua and Barbuda and Guyana had initially expressed reservations about the proposed acquisition, with St. John’s indicating that it would not be issuing a vesting order to facilitate the move.

The St. Kitts-based Eastern Caribbean Central Bank (ECCB) earlier this month announced that it had approved the application for the transfer of the assets and liabilities of the Bank of Nova Scotia (BNS) to the RHFL.

But the ECCB, which serves as central bank for islands in the Organisation of Eastern Caribbean States (OECS) said that regarding the future of Scotiabank’s operations in Antigua and Barbuda, the discussions are ongoing.

Earlier this month, following the government said that the offer to purchase the Antigua Scotiabank assets, given that RBFH has indicated “it no longer wishes to consummate that deal with Scotiabank, puts the government in a bargaining position that brings it closer to realizing its ambition for a consortium of local banks and the government to own those assets”.

Meanwhile, Attorney General Steadroy Benjamin has been asked to give consideration to commencing legal action against those who caused the Antigua and Barbuda Development Bank (ABDB) to lose more than EC$13 million (One Ec dollar=US$0.27 cents), taken from the Medical Benefits Scheme (MBS).

The government statement said that it was a former finance minister and a former CDBD chairman “who brought the MBS money and the two failed projects to the ABDB for funding, in which the Bank was made both lender and borrower of the funds.

“When the two projects failed, the ABDB could pursue no person or entity because the financial arrangements had been so structured that no liability could attach to the borrower. The money was essentially thrown away corruptly, the Cabinet concluded,” the statement said.

It said that as a result, the ABDB requires nearly EC$25 million dollars in new capitalization if it is to stay afloat, since it does not possess a sufficient amount of assets and capital to generate resources that could take it beyond March 2020.

“The challenge is being addressed by Cabinet before the crisis collapses the institution,” the statement noted.