BELIZE CITY, Mon. Nov. 23, 2020– The Bank of Nova Scotia first opened its subsidiary in Belize back in 1968. In 2020, it now has 9 branches and 21 ATMs and offers a complete range of retail and commercial banking services across the length and breadth of Belize.
Many Belizeans became deeply concerned when reports surfaced that the bank would be closing its Belize operations and that the company which owns Belize Bank Limited would be acquiring those assets held by Scotiabank Belize Limited (SBL). There were fears that the acquisition would result in a banking entity that would be too big to fail and could potentially place a stranglehold on Belize’s banking industry.
Many Belizeans waited anxiously as the Central Bank, headed by Joy Grant, engaged in deliberations before indicating whether or not the potential merger would be approved.
A few days ago a 7News report indicated that the results of those deliberations would soon be made public. It now appears to be confirmed that ScotiaBank Belize’s assets will indeed be merged with the Belize Bank Limited upon the completion of its acquisition, a process that started back in June of this year. Unconfirmed reports to local media are that the Central Bank of Belize has completed the revision process of this acquisition, and the 35-million-dollar deal is now believed to be closed.
With Scotiabank Belize approaching its imminent closure and Belize Bank Limited (BBL) poised to take over its assets and its customer base, the countrywide customer base of BBL will drastically widen, making Belize Bank the largest financial institution in Belize, with a resulting 50% of the market share in the banking sector. The banking operations of Belize Bank are owned and operated by Caribbean Investments Holding Limited (CIHL), whose majority shareholder is Lord Michael Ashcroft. In a release issued by CIHL in June 2020, the company’s secretary, Phillip Osborne, said, “The Board of CIHL believes that the purchase of SBL is an opportunity for the Group to expand its existing banking operations in Belize and that there are synergies between the Group’s current banking operations and the operations of SBL.
As a consequence of the Acquisition, the Group’s banking operations in Belize will be significantly expanded. The acquisition is expected to be immediately earnings enhancing to CIHL.”
This virtual takeover of the banking sector, as previously mentioned, is a major concern for Belizeans. The Belize Chamber of Commerce and Industry released a statement shortly after the announcement of the merger, highlighting the impact it will have on personal and business customers seeking banking services.
They urged the Central Bank to properly carry out their duty to scrutinize the terms of the acquisition and even called on Government to look into implementing competition laws to address market dominance in any industry.
The Central Bank of Belize is the regulatory body designated to approve these types of transactions, and while the finalization of this acquisition is yet to be confirmed in Belize, we see central banks in some Caribbean territories turning down proposals for the sale of other Scotia Bank branches in those countries.
Reports from The Global and Mail cited that the Central Bank in Guyana has so far denied Scotia Bank permission to sell its assets to the Trinidad and Tobago-based Republic Financial Holdings LTD, interestingly, citing similar concerns of excessive market concentrations and unfair competition in justifying the denial.
The Government of Antigua and Barbuda has also refused to approve the sale of Scotia Bank’s branch in that country.
At the completion of this acquisition, Belize Bank Limited will have over 20 branches and 49 ATMs across Belize, if they choose to integrate all the physical assets of Scotia Bank.
According to the Quarterly Financial Information of Domestic Banks released by the Central Bank of Belize as of June 2020, Scotia Bank Limited held about 21.8% of the total assets across the banking sector in Belize, and Belize Bank held approximately 26.5%.
After the acquisition, Belize Bank will hold 48.5% of the total assets across the banking sector in Belize, surpassing Atlantic Bank’s 35.4% market share by almost 13%.
This merger is a big-boy move, but nothing strange for Lord Michael Ashcroft. Just days before the announcement of CIHL’s buy-over of Scotia Bank Belize, Lord Ashcroft finalized a merger between two of his companies, Normandy Limited, a company registered on the Bermuda Stock Exchange, and BBL’s parent company, Caribbean Investment Holding Limited.
This merger between two of Lord Ashcroft’s interests placed CIHL on good footing to carry out this acquisition of SBL, since the acquired company had a handy 13.5 million pounds in cash sitting in accounts. Lord Ashcroft owned 82.7% of Normandy, and the merger was complete before it even began.
While this is not the case with the acquisition of Scotia Bank Belize, since the regulatory approval for sale is necessary to finalize the merger, the tedious legal contracts were a concern for even one of Belize’s best legal minds, former Prime Minister Dean Barrow.
He broke from decorum and publicly stated that he would speak to each government-appointed board member of the Central Bank to ensure the revision processes are “handled with the complete thoroughness it deserves.”
The newly elected PUP government will be in the crosshairs of the public, who will seek to know the position taken by their leaders, and will also be questioning the rationalization for what looks like a banking sector takeover at the start of their administration.
If the acquisition is approved by the Central Bank and a transition period of 18 months commences, Belize Bank has committed to retain all employees of Scotia Bank for up to one year only.
In the 2020 financial report from Caribbean Investments Holding Limited, Lyndon Guiseppi, Chief Executive Officer of CIHL, said, ”This acquisition, once completed, will form an integral part of the Group’s strategy to develop a strong banking franchise in Belize which will ultimately serve as a platform for the establishment of a Pan-Caribbean banking group.
The acquisition of SBL and subsequent merger with BBL will create a combined entity with just over $0.5 billion in loans, $0.4 billion in total deposits, and $0.1 billion in capital.”