India’s Bank of Baroda (BoB) yesterday sought bids from investment bankers to carry out the sale of its Guyana-based subsidiary.
According to the Financial Express “The objective of this assignment is to sell/disinvest Bank of Baroda’s entire 100% stake in its subsidiary BOBGI (Bank of Baroda Guyana Inc) through investment bankers,” BoB said in a bid document.
The report said that the Guyana subsidiary’s total business stood at GYD 14,560 million (nearly $70 million) at the end of September 2018, down from GYD 20,576.5 million at the end of March 2017 and GYD 21,092 million at the end of March 2016.
The report said that the sale is part of a strategy to exit relatively less remunerative international markets by BoB, which continues to call itself ‘India’s international bank’.
The Bank of Baroda branch here has not made any statement on the matter. This development comes days after it was announced that Canada’s Bank of Nova Scotia had struck a deal to sell a string of its Caribbean branches including Guyana’s to Republic Bank of Trinidad.
BoB’s website said that the Bank of Baroda (Guyana) Inc. was one of the earliest overseas branches of the Bank of Baroda. It was established in Georgetown, Guyana on March 31, 1966, less than a year after the formation of the Bank of Guyana, and prior to Guyana’s independence. In 1999 the website said that the overseas branch in Guyana was converted to a wholly owned subsidiary of the Bank of Baroda. In 2012 the bank set up a branch in Mon Repos on the East Coast of Demerara.
The Financial Express said that part of the impact was a result of a regulatory restriction on issuance of letters of undertaking (LoUs), which weakened the international portfolio of the bank to `19,000 crore from `38,000 crore over the April-June quarter of FY19. The contribution of international business to the bank’s balance sheet dropped to 23% from 27%. In February, the bank had decided to move out of South Africa in the wake of allegations that it facilitated money laundering by a non-resident Indian family in the country.
As a strategic move, the report said that the BoB has announced plans to focus on four overseas territories — the US, the UK, the United Arab Emirates (UAE) and Singapore.
PS Jayakumar, managing director and chief executive officer, BoB, was quoted as saying: “The bank is trying to look east a little bit. We have done some kind of an alliance with a leading Korean bank”. “He added that they are all new markets that we need to look at, such as Korea and Japan, where there is a large amount of business going through.”
The report said that that might signal a gradual move out of the bank’s six subsidiaries in Africa, one in Trinidad and Tobago and another in New Zealand.