By Elesha George
The government of Antigua and Barbuda wants to be able to take full advantage of the sale of the Bank of Nova Scotia Antigua to the Eastern Caribbean Amalgamated Bank (ECAB) before the buy-out is completed.
Currently, the government owns 25 percent in the amalgamated bank but has been attempting to sell its preferential shares to acquire double the ordinary shares.
“We’re now converting our preference shares into ordinary shares which would mean we would get up to 40-something percent,” Prime Minister and Minister of Finance, Gaston Browne, said in Parliament on Thursday.
Moments after touting the government’s successful intervention which helped ECAB to acquire the Canadian bank, Browne became brazen with his intentions to secure maximum returns on state investment.
“We’re not going to continue to wait on you and take your time and convert the shares. We want it done now,” he stressed.
He accused ECAB’s directors of allowing the profits to increase yearly so that the value of its shares can increase which, in turn, will reduce the government’s share value in ECAB.
“I want to say to our Antiguan directors of ECAB, you all are doing a disservice to the government because for at least two or three years we have been trying to convert those shares,” Browne said.
He even called on one of the indigenous directors to “stand up” for the country by convincing the principals of ECAB to convert the government’s shares immediately.
Browne said acquiring so many shares is part of his government’s strategy to increase non-tax revenue to take some financial burden off the Treasury.
“That’s the position we’re taking in the national interest because as they continue to dilly dally, especially if they do the conversion after the acquisition, then it means, Mr Speaker, that our shareholdings will be less. We want max shares because we want maximum returns,” he stated.
Antigua and Barbuda was the only member of the Organisation of the Eastern Caribbean States (OECS) to deny the sale of Scotiabank to Trinidad and Tobago’s Republic Financial Holdings Limited (RFHL) in 2018, saying instead that the bank should be purchased by a local bank to boost its portfolio.
Yesterday, Browne revealed that had the RFHL presented a fair price, he would not have opposed the sale.
While not regretting his decision, the finance minister explained that RFHL wanted to buy the Canadian bank for significantly less than what the local branch was worth.
“If Scotiabank was selling at market value, we would not have intervened,” he said, noting that the acquisition was taking place “at an under value”, “bad will”, or “negative good will”.
The prime minister estimated that Scotiabank’s Antigua branch made EC$27-$38 million a year in profits and therefore was worth more than EC$300 million.
He said that RFHL claimed that they were buying the bank at US $28 million but had requested that the government pay 40 per cent of the market value (EC $300 million) for an equity stake of 40 per cent of the bank.
However, Browne said when negotiation for the 40 per cent share started, RFHL was demanding that the government invest a total of $160 million. They also would not agree to let the government pay 40 per cent of the buying price, instead.
He said he later discovered from Scotia’s Vice President, Brendon King that the purchase was for US $16 million.