November 14, 2002
NBIC's $2.7B bid for GNCB approved
The National Bank of Industry and Commerce (NBIC) is set to take over the Guyana National Cooperative Bank (GNCB) after its $2.7B bid was formally approved by Cabinet on Tuesday.
The impending takeover was announced by Cabinet Secretary, Dr Roger Luncheon yesterday after Cabinet on Tuesday approved a recommendation by the privatisation board paving the way for the acquisition of GNCB ‘lock, stock and barrel’ by NBIC.
Republic Bank of Trinidad and Tobago has a majority interest in NBIC. Repeated efforts to reach Managing Director of NBIC, Michael Archibald on the deal yesterday proved futile. GNCB’s General Manager, John Flannagan told this newspaper that Dr Luncheon’s announcement was simply intended to record that Cabinet had approved an agreement in principle for NBIC to acquire GNCB. He said the parties still had to work on finalising details including the issue of staffing before they could publicly declare the deal sealed.
He noted that NBIC would not be taking over GNCB’s loan portfolio, most of which is believed to be bad debt but rather its operations and tangible assets.
Included in this is a massive deposit base of around $13B. With some 375 employees, GNCB has eight branches across the country along with its main headquarters at Lombard and Cornhill streets. Many of these locations are considered prime real estate and are close to NBIC branches. Questions have been raised as to how NBIC will consolidate the extra branches and staff with its operations. According to Dr Luncheon, the reconfiguration of the existing GNCB is the basis of the acquisition of the new company with the balance sheet and all assets being acquired by NBIC.
NBIC was chosen as the successful bidder over three other financial institutions including a Canadian Group, following a period of evaluation after bids were opened on August 23. Bids had also been received from Demerara Bank Ltd (DBL) and the Guyana Bank for Trade and Industry (GBTI). A bid from the St Kitts-Nevis Anguilla National Bank (SKNANB), was disqualified after it arrived 30 minutes after the deadline of August 23. This delay was attributed to the late arrival of a jetpack bringing the St Kitts bid.
Stabroek News understands that the Canadian Consortium, RNH Investment Corporation, which owns a financial intermediary, First International Capital and which entered the highest bid, had withdrawn its offer.
Bids had been received from four entities, two of which had been for the entire business. The other two had bid for specific branches. Preference, sources say, had been given to those bids which covered the entire business.
The bidding period had been extended to June from late last year after initial efforts to privatise the bank proved unsatisfactory. With the extension of the offer period early this year, local financial institutions were allowed to bid.
GNCB whose creation coincided with the country becoming a republic in February 1970, was intended to encourage ordinary Guyanese to save more while allowing them access to credit facilities. The bank was also designed to promote the cooperative drive and to this end over 300 cooperative societies took out shares in the bank.
GNCB had over the last five years experienced massive losses totalling some $4.6B all of which were charged against the Consolidated Fund and its external auditors had said that continuing operations would have been dependent on government and international lending agencies support.
The bank was hit hard by its loans in the mid-nineties to the rice sector and the merger with Guyana Agricultural and Industrial DevelopmentLet Bank (GAIBANK) in 1995 did not help its financial position.
NBIC has the largest market share of all banks in the country and the acquisition of GNCB will further expand this to around 48%. (Oscar P. Clarke)
Let us clear the mix up,the above is the deal when the bank was sold.
Dave's family purchased one of the buildings formerly owned by GNCB.