The decision by the Scotiabank to pull out of nine regional jurisdictions should be a wake-up call for Barbados to immediately improve its ease of doing business, president of the Barbados International Business Association (BIBA) Julia Hope has warned.
Even though Barbados was the exception to the mass withdrawal of the Canadian bank, Hope contended that for too long issues surrounding the opening of corporate bank accounts have impacted the bottom line of the region’s banking sector.
“We keep talking about the ease of doing business in Barbados and only yesterday we heard that Scotiabank is withdrawing from the region with the exception of Barbados and the ease of doing business relates to everything from being able to open and operate bank accounts through to incorporating companies through to having lawyers, accountants provide services. It’s the full gamut of services and banking forms a core part of those services,” said Hope who was speaking at a sensitization workshop on base erosion and profit shifting (BEPS) at the Baobab Towers, Warrens.
Yesterday news broke that 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 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.
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.
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 today Hope suggested that the writing was on the wall for Barbados unless active steps are taken to cut out the bureaucracy in the banking sector.
“Effectively we’ve got too much bureaucracy when it comes to business facilitation and not enough efficiency, so we really do need to start working on those processes in order to grow the sector, she said.
The BIBA president noted that “hearing that one of the significant players in that market is determined that the region is not where they need to operate, apart from Barbados does give us some cause for concern. We have significant issues operating bank accounts in Barbados and this is something that BIBA is working closely with the banks to hopefully resolve, but this does give us some cause for concern.”