The Government of St. Vincent and the Grenadines has agreed to repurchase 31 per cent of the Bank of St. Vincent and the Grenadines, formerly the state-owned National Commercial Bank (NCB), seven years after it sold the majority shares to Eastern Caribbean Financial Holdings (ECFH).
Prime Minister Ralph Gonsalves made the announcement on Monday, saying that the transaction would cost his government EC$32.3 million.
With the repurchase, the government’s share of the bank moves from 12 to 43 per cent, while ECFH, which also owns Bank of St. Lucia, will retain 20 per cent — down from 51 per cent.
The National Insurance Services (NIS), the state-owned social security institution in SVG, will retain its 20 per cent of the shares, while a number of private shareholders will continue to hold 18 per cent.
In 2010, the government sold ECFH 51 per cent of the then NCB for EC$42 million in what Gonsalves said was a “masterstroke”.
The sale was made shortly after the government had borrowed EC$100 million to help capitalise the bank.
In the announcement via a recorded address circulated by the state-owned National Broadcasting Corporation Monday evening, Gonsalves said that the 2010 sale of 51 per cent of the NCB’s shares to the ECFH meant that ECFH comprised the two leading indigenous financial institutions in St. Lucia and SVG.
He said that the strategic aim of the linking of these indigenous financial institutions was to act as a catalyst to amalgamate and consolidate the indigenous financial institution of the Eastern Caribbean Currency Union (ECCU) within a single financial space of the Organisation of Eastern Caribbean States (OECS).
Gonsalves, who is also Minister of Finance, said that after an appraisal by the ECFH, “decisions were reached on both sides, in St. Lucia and in St. Vincent and the Grenadines, which determined that the immediate future of the respective institutions, the Bank of St. Lucia and the Bank of St. Vincent and the Grenadines would be better served if each pursued stand-alone strategies which focus on their respective priorities and objective currently, thus deferring the amalgamation plan at this juncture”.
He said that the upshot of all of this is that Castries and Kingstown, with the blessing of the ECCB, mutually agreed that the Government of SVG will repurchase 31 per cent of the Bank of SVG from the 51 per cent shares owned by the ECFH of St. Lucia.
“This, in effect, reduces ECFH’s holding in the Bank of St. Vincent and the Grenadines to 20 per cent and increases the shareholding of the Government of St. Vincent and the Grenadines to 43 per cent,” Gonsalves said.
He said that last Friday, June 30, as Prime Minister and Minister of Finance, he signed the sale-purchase agreement to buy back the 31 per cent shareholding in the Bank of SVG from ECFH.
Gonsalves said that the agreed price for the buy-back is EC$32.3 million.
“Within the next few days, the transaction is expected to be formally completed,” he said, adding that, accordingly, the board of directors of the Bank of SVG will be reconstituted and refreshed.
“Business at the Bank of St. Vincent and the Grenadines, of course, continues as normal,” Gonsalves said, adding that his government expects that two senior executive of the Bank of SVG, who had been seconded to the Bank of St. Lucia will return to Bank of SVG.
Gonsalves said that over the next two or so years, it is the intention of his government and the other shareholders in the Bank of SVG, namely the ECFH, the NIS and private shareholders, to reform and build further the Bank of SVG “to greater heights of prosperity and solidarity…,
“It is the aim of the Government of St. Vincent and the Grenadines to make certain that it secures a good return on its investment and most importantly, to strengthen the financial system in St. Vincent and the Grenadines and the Eastern Caribbean Currency Union.”
Gonsalves said his government recommits to divest, in the medium term, a significant portion of its shareholding to other individuals and corporate partners in the region.
He said that on June 28, 2017, at his request and direction, members of the team advising the government on this transaction met with the Leader of the Opposition Godwin Friday and some of his parliamentary colleagues, including the immediate past Leader of the Opposition, Arnhim Eustace.
The government’s advisor informed the opposition delegation of “the facts and circumstances of the buy-back of the shares of the Band of St. Vincent and the Grenadines and the strategic way forward”.
He said this exercise was also done in 2010 when the government sold the 51 per cent originally.
The advisory team is composed of consultant, Andre Iton, Director General of Finance and Planning, Maurice Edwards, Budget Director, Edmund Jackson and Executive Director of the NIS, Stuart Haynes, Gonsalves said.
Gonsalves said they briefed him subsequently on their meeting with the opposition leader and his delegation.
“I assure all Vincentians and other nationals of the member states of the Currency Union that the buy-back of the bank of St. Vincent and the Grenadines shares by the Government of St. Vincent and the Grenadines does not represent a reversal of the amalgamation strategy earlier outlined,” Gonsalves said, adding that St. Lucia Prime Minister Allen Chastanet and chair of the Bank of St. Lucia, Andrew Chastanet are committed to this.
“I feel sure that this amalgamation, this combination of the banks, will all materialise at the appropriate time, under the right circumstance.”
He sought to assure persons who have interest in the bank, saying, “The Bank of St. Vincent and the Grenadines looks forward to protecting further the interest of all its depositors, customers and shareholders.
“This is our solemn responsibility,” the prime minister said.