PM says Scotiabank deal flopped because the gov’t was being ‘disadvantaged’

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By Latrishka Thomas

Negotiations between the Government of Antigua and Barbuda and Republic Financial Holdings (RFH) over the sale of Scotiabank’s shares has reached a sticking point.

Prime Minister Gaston Browne said this may be because of a disagreement relating to the immoderate amount of money RFH demanded for the purchase of the Antigua branch.

“Here we are saying to Republic Bank: ‘Okay you can take 60 percent and we will take 40 but we are paying 40 percent of what you pay Scotia’. They don’t want that. They want to have some kind of sophisticated evaluation, 10 times cash flow, so we have to pay four times the amount as though we can’t count,” Browne said explaining why the deal might have fallen through.

In its letter to the government here, RFH claimed that the Government of Antigua and Barbuda had misconstrued its intention to value Scotiabank’s assets for the Antigua branch.

But Prime Minister Browne, on Saturday, imputed that RFH was attempting to extort his government into paying four times the amount that they [RFH] would have paid to absorb Scotiabank’s assets.

 “Here’s a situation where we are negotiating for the purchase of 40 percent of the Scotiabank Branch here in Antigua. They are purchasing the branch from Scotiabank Canada for about US $26 million and they wrote to us to tell us that, you know what, the value of this bank would be in the region of $288 million using 10 times cash flow.

“So, in other words what they were saying to us is that you cannot use the US $26 million that you are paying Scotiabank as the value. They were suggesting to us that we should pay 40 percent of US $288 million rather than 40 percent of EC $70 million. They would have increased the value of the asset four times, so we would have had to pay four times the value that they gave to Scotiabank,” Browne, the Minister of Finance, explained.

Republic, in its letter, however, claimed it wanted a mutually independent expert to ascertain the value of Scotiabank Antigua.

Since then, RFH has expressed that it is no longer interested in purchasing “any portion of the Antigua branch”, and has already communicated its pullout to Scotiabank’s executives in Canada. In the meantime, Prime Minister Browne has written to the bank’s executives in Canada to inform them that a consortium of local banks is still interested in the purchase.

Meanwhile, PM Browne has declared his government’s terms of closure for any bank that is desirous of discontinuing operations on the twin island.

“Our policy position is for all multinational banks operating in the domestic economy – Scotiabank, Royal Bank, FCIB – when they leave, they must give the local banks the first right of refusal. That is the policy of my government and we make no apologies about that policy. That policy is in the best interest of the people of Antigua and Barbuda,” he stated.

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