Editorial: The ‘Consortium’ euphemism for ‘most favored banker’

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This is not the title of the reprint which we have decided to make our editorial today, because we consider its message relevant and its warnings powerful for what is currently taking place in Antigua whereby a Prime Minister is trying to pressure or bully an international financial institution to abandon a lawful transaction with a legitimate prospective buyer for no reason other than he prefers the sale be made to another entity that HE approves and favors.

Perhaps Ian Moncrief-Scott and his mondaq.com website have some unwholesome motive for focusing on – maybe even targeting – Antigua and Barbuda so much. The world is, after all, full of hitmen, snipers and hatchet men of every sort. But Prime Minister Browne might do well to step back (even if it’s for only a second) to ponder what kind of international publicity and exposure this country is likely to have from his ongoing power play for Scotiabank Antigua.

With all that’s happening to us in terms of the de-risking/de-banking dismemberment that our financial sector anatomy is being subjected to; the dwindling fortunes of our CIP; Canada’s painful pivot against us on the visa-free-access issue; the US’s continued obdurate refusal to abide by comprehensive WTO rulings in our favour – we kind of wonder if we really need to be stoking and provoking this kind of commentary in the international online press.

The following excerpts are taken from an article titled Antigua and Barbuda: De-Risking In Jeopardy, published last month (January 2019) on mondaq.com by Ian Moncrief-Scott.
Another senior, long-standing international banking brand is abandoning Antigua. This time it is the Bank of Nova Scotia, operating as Scotiabank, that has chosen to recognise the significance of risk versus reward by its newly publicised de-banking and de-risking decision.

Scotiabank has announced its intention to sell its operations in nine Caribbean countries, subject to regulatory approval, including Antigua & Barbuda, to Republic Financial Services Ltd., a Trinidad & Tobago financial services provider.

Notably, this is a further Canadian Institution that is re-positioning itself within a climate of anti-money laundering currently strengthening in mainland Canada.  

Meanwhile, Antigua’s Prime Minister Gaston Browne has expressed his shock at Scotiabank’s decision and has told the institution that it will require both local regulatory and his Government’s approval to sell its Antiguan subsidiary.  Furthermore, any such approval would be conditional on the buyer being an Antiguan entity.

Scotiabank does not share this view and has agreed to a sale of its entire Caribbean holdings to the well-established and reputable Republic Bank Limited, headquartered in neighbouring Trinidad & Tobago. Scotiabank claims it has carefully chosen Republic Financial Holdings to acquire its portfolio in a move that responsibly reflects its regulatory banking responsibilities to shareholders and customers.

Looking at the history of Republic Bank is useful. Colonial Bank, the forerunner of Republic Bank was established in 1837 by Royal Charter.  In 1925, it merged with the Anglo-Egyptian Bank (est. 1864) and the National Bank of South Africa (est.1891) to form Barclays Bank, Dominion, Colonial and Overseas.  In 1972, Barclays DCO became Barclays Bank International Limited.

The name was changed to Republic Bank Limited in 1981 and Barclays sold its stake in 1989. In the years that followed, the Bank continued to develop.  This included the purchase of 20% of Canadian Imperial Bank of Commerce (West Indies) Holdings Limited.  This gave RB links to holding company’s branches in the Caribbean islands of Antigua & Barbuda, Jamaica, Barbados, St. Vincent and St. Lucia.   The Bank still has correspondent banking relationships with Barclays, Toronto Dominion and Bank of New York.

On the other hand, local banks in Antigua have less distinguished origins and reputations. It is recent history that Antigua & Barbuda has been recklessly responsible for a long list of bank failures, through government loan repayment defaults, breaches of financial and constitutional obligations, and a judicial system which allows itself to be ignored in most cases dealing with the Government. 

The final bank to note is the Caribbean Union Bank and its $30 million Antigua & Barbuda Government investment, backed by an 80% shareholding. In 2016 Prime Minister Browne claimed, “It is true that CUB may not have been the strongest of banks, but for various reasons, including strategic reasons, we have chosen to take an equity stake in the bank. It was not difficult for us to consolidate CUB with ECAB (Eastern Caribbean Amalgamated Bank) without buying the bank. That was the option available to us, so even if there is a notion that CUB was not healthy and it needed a bailout, we would have had to bail it out anyway,” he argued.

When announcing his Government’s intention to take over CUB, Prime Minister Gaston Browne, whose professional experience in banking matched that of a commercial banking manager of the Swiss American Banking Group, told commercial banks to expect competition from the Government, accusing them of being risk-averse.

The Caribbean Union Bank, incorporated in 2004 and the Global Bank of Commerce Ltd share the same building.  Mr. Brian Stuart-Young is Chairman of GBC and a director of CUB.

The choice made by the Bank of Nova Scotia is obvious.  The opportunity for expropriation of yet another provider of Foreign Direct Investment equally so. We shall now watch the outcome and its consequences which will undoubtedly affect stakeholders on both sides. It appears to be growing into a dispute.

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