Opposition leader, Philip J. Pierre has warned that there may be a monopoly situation in banking here.
His comments follow the announcement that Canadian-based Bank of Nova Scotia had agreed to sell its operations in nine Caribbean countries to a Trinidad-based financial institution.
“What that calls for is, we have to look at monopoly and trust rules and regulations and I think we should do that at the level of the OECS,’ Pierre, who is an economist said.
He asserted that mergers and acquisitions will continue.
Pierre noted that the bank is going to become further involved in the financial system by moving into insurance.
“So it calls for legislation regarding mergers and acquisitions and legislation regarding new business orgnisations and I recommend that we do this at the OECS level,” he told reporters Wednesday.
According to the Saint Lucia Labour Party (SLP) leader, there is need to examine the legal framework under which businesses operate, including regulations pertaining to mergers and monopolies.
“Also it calls into question the role of the Central Bank. The Central Bank may have to look again at its role because what may happen is since you have a near monopoly situation in the banking system, the banks may want to increase charges and fees,” Pierre explained.
“ It calls for our local and indigenous financial institutions to come to the fore – our credit unions must come to the fore because what’s happening is a very serious thing. It is going to happen more and more. You are going to have one big player operating in the system and once you have one big player there may be chances of things not going as they ought to,” Pierre declared.
Scotiabank said Tuesday it has signed an agreement to sell its banking operations in nine markets — including Grenada, St. Maarten and St. Lucia — to Republic Financial Holdings Ltd. for an undisclosed amount.
The bank also said its subsidiaries in Jamaica and Trinidad and Tobago will sell their insurance operations and partner with Sagicor Financial Corp. Ltd. to provide products and services in the two countries, for an undisclosed amount.
While urging the consideration of legislation relating to mergers and monopolies, Philip J. Pierre said it was not a case of being anti-business or being against expansion or discouraging the transfer of knowledge and technology.
But he asserted that there was need to protect the consumer.
“When you have a situation where you have one big player in the system then the consumer suffers and for the consumer not to suffer, you need proper legislation,” Pierre told reporters.
He nevertheless asserted that on the bright side of things, with one large player it may be easier to deal with de-risking issues.
“It’s a threat, but it’s an opportunity and I hope that with one big player the consumer does not suffer unduly.”