The Bank of Nova Scotia has reached a deal to sell its operations in Antigua and Barbuda to a local bank, ending a standoff with the Antiguan government that scuttled a previous effort to sell the business.
Scotiabank has two branches and fewer than 75 staff in Antigua and Barbuda. The operations will be sold to Eastern Caribbean Amalgamated Bank Ltd., a locally based commercial bank. Terms of the deal were not disclosed, but it is not financially material to Scotiabank.
The sale resolves a stalemate with Antigua’s government that dragged on for nearly two years. In late 2018, Scotiabank announced a deal to sell its operations in nine Caribbean countries, including Antigua and Barbuda, to Republic Financial Holdings Ltd., which is 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 instead, promising to withhold necessary government approvals to strengthen his hand.
In August, 2019, Scotiabank warned in a letter that it might consider options that could include closing its branches in Antigua and Barbuda. Three days later, Mr. Browne replied with a sharply worded letter that accused Scotiabank of showing a “blatant disregard” for his country’s laws.
Ultimately, Scotiabank sold its businesses in seven of the nine countries to Republic Financial Holdings.
Mr. Browne told The Globe and Mail last year that he was insisting Scotiabank sell to a local buyer to consolidate his country’s vulnerable banking sector, which had suffered multiple bank failures and lost access to key correspondent banking relationships. He said it was not intended to be a sign of hostility to foreign investors.
But his government has taken the same position with Canadian Imperial Bank of Commerce, threatening to block part of a deal CIBC struck to sell a majority stake in its Caribbean business. When 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 news release that it “acknowledges the government of Antigua and Barbuda’s support for this transaction," and will work with regulators to get approval.
Antigua and Barbuda’s High Commissioner to Canada, Sir Ronald Sanders, 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, this is the best result.”
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.