Republic Financial Holdings Ltd., the Trinidad-based company that is in the process of becoming the majority shareholder of Cayman National, announced that it has entered into an agreement to acquire Scotiabank’s banking operations in Guyana, St. Maarten and seven Eastern Caribbean territories.
The acquisition is part of the financial group’s expansion strategy in the Caribbean according to Chairman Ronald F. deC. Harford, who called the deal “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,” he said. “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.”
Republic is paying US$123 million for the Scotiabank operations. This represents US$25 million for the total shareholding of Scotiabank Anguilla Limited and a premium of US$98 million over the net asset value of the operations in the other eight countries, the group said.
This amount does not include any capital that may be required to capitalize the branches after the deal closes.
At the end of September, Republic Group reported about $10.5 billion in assets, equity of $1.5 billion and annual profits of $198 million.
The acquisition of the Scotiabank entities will increase the group’s asset size by about $2.5 billion and add approximately $0.20 per share in earnings, Republic said in a statement.
Earlier this month, shareholders of Cayman National lifted a restriction that prevented a single entity from owning more than 10 percent of the company. The move paved the way for Republic Group to acquire 74.99 percent of Cayman National at US$6.25 per share, through its wholly owned subsidiary Republic Bank Trinidad and Tobago (Barbados) Ltd.
This transaction still requires regulatory approval in Cayman, the Isle of Man and Dubai – the jurisdictions where Cayman National operates.
Commenting on the Scotiabank deal, Mr. Harford said Republic Group has confidence in the Caribbean and was seeking out expansion opportunities in the 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.
Scotiabank, in contrast, is divesting in the region as part of a strategy to focus on the bank’s larger, core markets.
Ignacio Deschamps, group head of international banking of the Canadian lender, said increasing regulatory complexity and the need for continued investment in technology to support regulatory requirements had prompted the decision “to focus the bank’s efforts on those markets with significant scale.”
However, Scotiabank remains committed to the Caribbean, he said. This was demonstrated by the bank’s “ongoing investment in products, services and processes to provide an enhanced banking experience to customers across the region.”
In addition to the sale of banking operations in Anguilla, Dominica, Grenada, Guyana, St. Kitts & Nevis, St. Lucia, St. Maarten and St. Vincent and the Grenadines, Scotiabank will sell its insurance subsidiaries Scotia Jamaica Life Insurance Company and ScotiaLife Trinidad and Tobago Limited to Sagicor.
This transaction is contingent on the closing of Sagicor Financial Corp’s US$536 million takeover by Alignvest Acquisition II Corp and certain conditions related to a plan to list the company on the Toronto Stock Exchange.
“Scotiabank is proud to work with the Republic Group and Sagicor – both leaders in financial services in the Caribbean who are well positioned to invest and grow these businesses,” Mr. Deschamps said.