ST. VINCENT:- Call it the Bank of St. Vincent, the National Commercial Bank (NCB) no longer exists.
Prime Minister Dr. Ralph Gonsalves announced on Friday, Nov. 19 that the sale of the NCB to East Caribbean Financial Holding Company Limited (ECFH), parent company of the Bank of St. Lucia, is complete.
He further said that the bulk of the EC$42 million (US$15.55 million) his government received for the 51 per cent of the NCB shares sold to ECFH will be allocated to the International Airport Development Company (IADC).
Amidst severe criticism from the Opposition New Democratic Party (NDP), the Gonsalves Unity Labour Party (ULP) administration privatised the NCB in October.
The government will retain 49 per cent of the shares, and intends to divest 29 per cent of those shares to the country’s National Insurance Service and citizens of SVG and the region within the next 12 months.
Gonsalves outlined the terms of the share holders and sales and purchase agreements during a media briefing on Friday, one week after he and Robert Nordstrom , group manager of ECFH placed the final ink on the agreements.
Gonsalves, who is also minister of finance, said EC$8.25 million (US$3.05 million) will be allocated to the student loan programme.
Some 20 per cent of that amount will be taken out annually if student loan replacement delinquency is less than 10 per cent.
That 20 per cent will be transferred to the government’s general account until the fund stabilizes at EC$825,000 (US$305,555) and the remaining monies will be used to finance other capital projects.
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Gonsalves said that as part of the agreement, when the EC$100 million (US$37.03 million) his government borrowed from the Caribbean Development Bank is paid into the NCB, the public sector debt will fall to EC$60 million (US$22.22 million).
The bank will then release to National Properties Limited (NPL) two parcels of state lands at Mt Wynne/Peters Hope, totalling 121.351 acres.
He said that the conveyance of the lands will be prepared by the Attorney General’s chambers to avoid lawyers cashing in on the EC$40 million (US$14.82 million) transfer.
“Can you imagine transferring back approximately $40 million of real estate how much lawyers will charge you? They will have a bonanza. So, I am taking away from any lawyer that bonanza and let the Attorney General, who normally makes a normal salary, they make it,” he said.
“My business is not to make lawyers happy but to make the people of St. Vincent and the Grenadines happy,” said Gonsalves, a lawyer.
The ECFH has agreed that the NCB’s monetary deposits with the cash-strapped British American Insurance Company Limited
(BAICO) and Colonial Life Insurance Company Limited (CLICO) will be transferred to the government or it nominee before or after the completion of the sale.
“What that means is this: … in cleaning up our balance sheet at the bank, we made provisions for the amount of money which we had in CLICO and the amount of money we had in British American. So that when the new 51 per cent purchasers came, we have a clean balance sheet. But clearly, if I clean up the balance sheet and the bank subsequently recovers the money from CLICO and British American, obviously that can’t go to the bank,” Gonsalves said.
“Those are the important issues relating to the sale and purchase agreement,” he added.
Four directors will be appointed by ECFH while the government will appoint three. The chief executive officer will be a non-voting member of the board of directors.
The government’s representatives are Evelyn Jackson, a former accountant general; Judy Vieira, an actuary and insurance and finance consultant; and, Godwyn Daniel, a who has worked in the private sector, including in agriculture.
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Gonsalves listed 13 things that can only be done with the approval of 75 per cent of the directors present and voting.
These include new undertaking or changes in the operations of the bank and the issuing or allotment of shares and other voting security to a third party.
“In other words, they can’t go and take their shares and allot them to somebody else unless they get 75 per cent of the voting. And you can’t have 75 per cent because we have three out of the seven,” Gonsalves said.
“I expect that this bank will grow with this new equity partner and I expect as what happened in St. Lucia, where the government has 24-25 per cent in the Bank of St. Lucia. They make more money from the bank in dividend than when they had 100 per cent. And I expect us – that to happen here in St. Vincent and the Grenadines,” Gonsalves added.
Gonsalves said that the NBC controlled almost 40 percent of the local banking sector and about 25 per cent of the bank’s business was with the government.
“Even if the government didn’t have one single share in NCB, we would have been the biggest customer. And anybody who is running a bank has to listen to the biggest customer because they need your business,” he said.
“…It’s not armatures engaged in this matter you know,” he further said, adding that the sale was “for the better of St. Vincent and the Grenadines, better for the banking business”.
He said the transaction has the blessing of the Eastern Caribbean Central Bank (EECB), adding that no worker will be retrenched even as modern and efficient systems would be implemented.
“How could anybody tell me that that is a bad deal? I think persons [are] not reflective. … Vincentians know that I would not have done this unless it’s absolutely in the interest of the people of St. Vincent and the Grenadines and the Eastern Caribbean Currency Union,” he said.
NDP president and opposition leader Arnhim Eustace has criticised the sale of the NCB, saying that Gonsalves was forced to privatise the bank after he mismanaged it.
The NDP has also said that the ECCB sanctioned the sale in order to save the currency union.