STATEMENT ON SALE/PURCHASE OF SHARES IN BANK OF ST VINCENT AND THE GRENADINES

By Dr The Hon Ralph E Gonsalves, Prime Minister of St Vincent and the Grenadines

on radio and television on Monday, July 03, 2017

BACKGROUND

In November 2010, the Government of St Vincent and the Grenadines (GOSVG) sold 51 per cent of its shares in the wholly-owned State financial institution, then known as the National Commercial Bank (NCB), to the St Lucia-based Financial Services Group, the Eastern Caribbean Financial Holdings Limited (ECFH). The ECFH owned, and still owns, the Bank of St Lucia Limited (BOSL). The ECFH itself is owned by a number of shareholders including the Government of St Lucia, a commercial bank in Trinidad and Tobago, and several other stakeholders, public and private, among which is the National Insurance Services of St Vincent and the Grenadines.

At the time of the sale of 51 per cent of the NCB’s shares to ECFH, the Government of St Vincent and the Grenadines announced its public policy of the further divestment of its shareholding in the successor bank which was named the Bank of St Vincent and the Grenadines (BOSVG). As a consequence of this policy, as at June 30, 2017, the shareholding in BOSVG was as follows: ECFH, 51 per cent; NIS of St Vincent and the Grenadines, 20 per cent; a number of private shareholders, 18 per cent; and the Government of St Vincent and the Grenadines, 12 per cent.

The sale of 51 per cent of NCB’s shares to ECFH meant that the ECFH group comprised the two leading indigenous financial institutions in St Lucia and St Vincent and the Grenadines, namely Bank of St Lucia and Bank of St Vincent and the Grenadines. The strategic aim of this linkage of indigenous institutions was to act as a catalyst to amalgamate and consolidate the indigenous financial institutions of the Eastern Caribbean Currency Union (ECCU) within a single financial space of the Organization of Eastern Caribbean States (OECS). Indeed, part of this strategic quest was to pursue the amalgamation of the BOSVG and BOSL as one indigenous (ECCU) commercial bank as a precursor to further consolidation of indigenous financial institution in the ECCU. This strategic quest was within the frame of the settled public policy of the Monetary Council of the ECCU.

The process towards the full amalgamation of the two Banks (BOSVG and BOSL) gathered momentum in mid-2015 and was well advanced, close to full implementation, in the third quarter of 2016. In the moving dynamic of this process, the ECFH Group, however, paused to revisit the appropriateness of the strategy for the St Lucia entity having regard to its extant particular circumstances.

As a result of this reappraisal by 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 (BOSL and BOSVG) would be better served if each pursued stand-alone strategies which focussed on their respective priorities and objectives currently, thus deferring the amalgamation plan at this juncture.

BUY-BACK OF 31 PER CENT OF BANK OF ST VINCENT AND THE GRENADINES

The upshot of this is that the governments of St Lucia and St Vincent and the Grenadines, with the blessing of the Eastern Caribbean Central Bank, mutually agreed that the Government of St Vincent and the Grenadines would re-purchase 31 per cent of the Bank of St Vincent and the Grenadines from the 51 per cent shares of the ECFH. This in effect reduces ECFH’s holding in the BOSVG to 20 per cent and increases the shareholding of the GOSVG to 43 per cent. On June 30, 2017, as Prime Minister and Minister of Finance, I signed the Sale/Purchase Agreement to buy back this 31 per cent shareholding in BOSVG from ECFH. 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. Accordingly, the Board of Directors of the BOSVG would be reconstituted and refreshed. Business at BOSVG, of course, continues as normal. We expect that two senior executives of the BOSVG who had been seconded to BOSL will return to us in the not-too-distant future.

Over the next two or so years it is the intention of the GOSVG and the other shareholders in BOSVG, namely, ECFH, NIS of SVG, and the private shareholders, to reform and build further the BOSVG to greater heights of prosperity and solidity. It is the aim too, of the GOSVG to make certain that it secures a good return on its investment and, most importantly, to strengthen the financial system in SVG and the ECCU.

In accordance with our established public policy, the GOSVG recommits to divest, in the medium-term, a significant portion of its shareholding to other individuals and corporate partners in the region.

On Wednesday, June 28, 2017, at my request and direction, members of the team of advisors to the GOSVG on this transaction met with the Honourable Leader of the Opposition and some of his parliamentary colleagues, including the immediate past leader of the Opposition, to inform them of the facts and circumstances of the buy-back of the shares of BOSVG and the strategic way forward. A similar exercise had been done in 2010 when we sold the 51 per cent. These members of my advisory team (André Iton, consultant; Maurice Edwards, director general of Finance and Planning; Edmond Jackson, Budget director; and Stewart Haynes, executive director of the NIS) briefed me subsequently on this meeting last week with the Leader of the Opposition and this delegation. I thank these professional and patriots, and others, including Sir Errol Allen, chair of the Board of Directors of BOSVG, three professional bankers (Derry Williams, Bennie Stapleton, and Bernard Hamilton), and Lennox Bowman, chair of the Board of the NIS. I thank my Cabinet colleagues for their support and guidance in this venture. I record, too, my appreciation and thanks to the Prime Minister of St Lucia, the Honourable Allen Chastanet, and the chair of the Board of the ECFH and the BOSL, André Chastanent.

I assure all Vincentians and other nationals of the member-states of the ECCU that the buy-back of BOSVG shares by the GOSVG does not represent a reversal of the amalgamation strategy earlier outlined. Indeed both Prime Minister Chastanet and André Chastanet of BOSL are also committed to the amalgamation and consolidation of the indigenous banking sector as the rational and desirable approach to ensuring its stability and sustainability. I feel sure that it will all materialize at the appropriate time and under the right circumstances. Accordingly, we in the GOSVG and the BOSVG are pleased that ECFH is retaining a 20 per cent share of BOSVG, and thus as role in our bank.

The BOSVG looks forward to protecting further the interests of all its depositors, customers, and shareholders. This is our solemn responsibility.

Forty years ago, in June 1977, two years before SVG become and independent nation, our nation’s leader of blessed memory Robert Milton Cato, and his colleagues in the Labour Party government inaugurated the National Commercial Bank of SVG. Over the past 40 years, this bank and its successor, BOSVG, have advanced by leaps and bounds through its various phases of development. The buy-back of shares is another milestone in this dynamic financial institution, a veritable living organism, which like all living organisms must continue to adapt and change, always in quest of the better. We are confident of a bright future of BOSVG and the indigenous banking sector in the ECCU. The Government of St Vincent and the Grenadines will now own 43 per cent and the NIS 20 per cent of the BOSVG. I reiterate that we will, in the medium term, divest a significant portion of the Government’s shareholding. My government has taken vital steps for the further strengthening of the BOSVG and our region’s banking system.

May Almighty God continue to bless us all.

Thank you!