The Bank of Nova Scotia struck a deal to sell its Antigua and Barbuda operations to a local bank, ending a standoff with the Antiguan government that scuttled an earlier effort to sell the company.
Scotiabank has two branches and fewer than 75 employees in Antigua and Barbuda. The operations will be sold to Eastern Caribbean Amalgamated Bank Ltd., a local commercial bank. Terms of the transaction were not disclosed, but they are not financially significant to Scotiabank.
The sale resolves an impasse with the Antiguan government that has dragged on for nearly two years. At the end of 2018, Scotiabank announced an agreement to sell its operations in nine Caribbean countries, including Antigua and Barbuda, to Republic Financial Holdings Ltd., based in Trinidad and Tobago. Antiguan government officials were caught off guard, and the country’s prime minister Gaston Browne sought to force Scotiabank to sell its business to local banks, promising to withhold government approvals needed to strengthen its hand.
In August 2019, Scotiabank warned in a letter that it could consider options that could include closing its branches in Antigua and Barbuda. Three days later, Browne responded with a blunt letter accusing Scotiabank of showing “blatant disregard” for the laws of his country.
Eventually, Scotiabank sold its operations in seven of the nine countries to Republic Financial Holdings.
Mr Browne told The Globe and Mail last year he was insisting that Scotiabank sell to a local buyer to shore up his country’s vulnerable banking sector, which had suffered multiple bank failures and lost access to main bank correspondents. He said it was not intended to be a sign of hostility towards foreign investors.
But his government has taken the same stance with the Canadian Imperial Bank of Commerce, threatening to block part of a deal made by CIBC to sell a controlling stake in its Caribbean operations. When the Royal Bank of Canada sold its Eastern Caribbean operations late last year, it avoided tensions by selling its Antiguan entity to Antigua Commercial Bank Ltd.
On Tuesday, Scotiabank said in a press release that it “recognizes the support of the government of Antigua and Barbuda for this transaction” and that it will work with regulators to secure approval.
The High Commissioner for Antigua and Barbuda in Canada, Sir Ronald Sanders, has confirmed the government’s support. “It’s not great that Canadian banks are leaving the region,” he said in an interview. “But if they have to, it’s the best result. “
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