The Toronto-based Scotiabank is drastically scaling back its operations in the Caribbean after more than a century of doing business in this region. The Barbados operation of the bank is not included in the US$123 million banking deal that will see nine other operations going to Republic Financial Holdings Limited (RFHL), which operates Republic Bank, and the Scotia life insurance business going to a new Sagicor subsidiary.
Scotia announced today that it will be pulling its banks out of Guyana, St Maarten and the Eastern Caribbean territories of Anguilla, Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, St Lucia, and St Vincent and the Grenadines and handing over its life insurance subsidiaries in Jamaica and Trinidad and Tobago to the new business.
Insurance giant Sagicor also announced today that it will, with Canadian-based Alignvest, acquire Scotiabank’s life insurance operations in Jamaica and in Trinidad & Tobago. This business will be held by the licensed sales company New Sagicor which expects to enter into a 20-year exclusive partnership agreement with Sagicor to sell insurance products to Scotiabank’s clients in Jamaica and in Trinidad & Tobago.
This morning Republic’s parent company said subject to regulatory approval and other conditions, it would acquire Scotiabank’s banking operations at the $123 million purchase price representing US$25 million for total shareholding of Scotiabank Anguilla Limited and a premium of US$98 million over net asset value for operations in the remaining eight countries. This price does not include any amounts required to capitalize the branches post-closing.
RFHL’s Chairman Ronald F. deC. Harford said the acquisition represented another major milestone for the Republic Group.
“As we grow and acquire significant positions in our existing markets, it is important that we continue to broaden our footprint, regionally and internationally. This agreement, which is subject to all regulatory approvals, affords us the opportunity to reach more clients in the Eastern Caribbean and Guyana, two markets we are familiar with, and build new relationships in St Maarten,” he said.
“We are confident that our expanded presence or entrance in those markets will redound to the benefit of Scotiabank’s clients and employees as well as Republic’s existing stakeholders. I would like to thank Scotiabank for the confidence expressed in our ability to look after their valuable clients, and we are pleased that all impacted employees of Scotiabank in the nine countries will join the Republic Group,” Harford added.
Harford explained that RFHL’s focus on seeking out expansion opportunities in the Caribbean was a testament to the Group’s confidence in and commitment to the Caribbean region.
“We have a proven track record of adding value to the markets we enter, and we look forward to partnering with the teams in these territories to deliver excellence in customer satisfaction, employee engagement and social responsibility,’ he said.
The Republic Group’s total asset base as at September 30, 2018 stood at US$10.5 billion, with equity at US$1.5 billion and profits attributable to shareholders for the year ended September 30, 2018 of US$198 million.
This acquisition will increase Republic’s asset size by approximately US$2.5 billion and will be contributing value to the earnings of the Group by approximately US$0.20 per share. Citigroup Global Markets Inc. is advising RFHL on this transaction.
Scotiabank said the deal with RFHL was not financially material to Scotiabank.
However, Group Head, International Banking at Scotiabank Ignacio (Nacho) Deschamps said Scotiabank was “proud to work with the Republic Group – a leader in financial services in the Caribbean who is well positioned to invest and grow the business, and to provide customers across the region with leading financial solutions that meet their needs”.
He noted that due to increasing regulatory complexity and the need for continued investment in technology to support regulatory requirements, Scotiabank “made the decision to focus the bank’s efforts on those markets with significant scale in which we can make the greatest difference for our customers”.
“Scotiabank is committed to the Caribbean as demonstrated by the bank’s ongoing investment in products, services and process to provide an enhanced banking experience to customers across the region,” Deschamps said. Until such time that the agreement is closed, all Scotiabank operations in the nine named territories will continue as usual.
However, as part of the proposed agreement, impacted employees of Scotiabank in the nine countries will join the Republic Group and employees of Scotia Jamaica Life Insurance Company and ScotiaLife Trinidad and Tobago Limited will join Sagicor or New Sagicor.
“Scotiabank is committed to working closely with RFHL and with Sagicor to provide the smoothest transition possible for all customers and employees,” Scotiabank said in a release.
Scotiabank earned $2.27 billion or $1.71 per diluted share for the three months ended October 31, up from $2.07 billion or $1.64 per diluted share in net income for the same period last year.
For its full financial year, Scotiabank said it earned $8.72 billion or $6.82 per diluted share, compared with a profit of $8.24 billion or $6.49 per diluted share in 2017.