Caribbean Investment Holdings Ltd., an entity controlled by British billionaire and Belize Bank owner Lord Michael Ashcroft’s, today announced that an agreement to acquire the banking operations of ScotiaBank Belize was signed on 19 June 2020. Ashcroft’s acquisition of Scotiabank Belize significantly expands his operations in the country including the Port of Belize and its stalled Waterloo cruise ship terminal proposal. Scotiabank which has been operating in Belize since 1968, currently has nine branches and twenty-one ATM machines nationwide. (Image ScotiaBank Belize Corozal Town Branch). The British Virgin Islands based CIHL is the parent company for the Belize Bank Limited. If approved by the Central Bank, projections are that the acquisition would give Ashcroft’s CIHL control of a majority of Belize’s commercial banking sector.
As noted by Joy Grant Governor of the Central Bank of Belize in a video released 22 June 2020, staff members are guaranteed one year job security as part of the buy-over agreement. As it relates to the existing Scotiabank customers, Governor Grant says they do not anticipate any hiccups in the way business is done. This is yet another shift in the banking sector in Belize. Back in August 2015, First Caribbean Bank was bought over by Heritage Bank; almost three years later, in June 2018, Choice Bank’s license was revoked by the Central Bank of Belize followed by Atlantic International Bank whose license was revoked in April 2019. With this merger, Belize will now have three local commercial banks, namely, Heritage Bank, Belize Bank and Atlantic Bank.
In a statement during a television interview in Belize, Lord Michael Ashcroft stated “For the Belize Bank, in this post-pandemic world that we are about to come into, I feel it’s very important that one: that I’m prepared to make a substantial investment in the country at this point of time when foreign investment coming into Belize is at probably its lowest ever. And secondly, to be able to have a financial institution here that can weather the storm and work closely with the government in order to operate in the best interest of all stakeholders, not just the shareholders of the ultimate parent company of Belize Bank, but the nation, the various sectors and so I am looking forward to that.”
From CIHL’s press release: Road Town, Tortola, British Virgin Islands, 22 June 2020 — (London – AIM: CIHL; Bermuda – CIHL) (the “Company” or “CIHL”).
The Company today announces that it has reached an agreement for the purchase of Scotiabank (Belize) Ltd. (“SBL”) from Scotiabank Caribbean Holdings Ltd., (the “Seller”) a subsidiary of The Bank of Nova Scotia (“BNS”), for an initial purchase price of up to US$30.5 million (“Acquisition”). The Acquisition is subject to regulatory approval and customary closing conditions.
Terms of the Acquisition
The Acquisition will be effected pursuant to a share purchase agreement among the Company, the Seller and BNS dated 19 June 2020 (the “Agreement”). Under the terms of the Agreement the Company will acquire all of BNS’s licenced banking operations in Belize through the acquisition of the entire issued share capital of SBL.
Under the terms of the Agreement the Company will pay the Seller an initial consideration of up to US$30.5 million (the “Initial Purchase Price”) at closing of the transaction. The Initial Purchase Price amount includes both the expected shareholder equity of SBL of US$28.5 million and a premium of US$1.5 million.
In addition to the Initial Purchase Price, the Company may be required to pay up to an additional US$4.5 million in the event that the shareholders equity of SBL exceeds US$28.5 million (the “Additional Consideration”) as a result of any regulatory change occurring between signing and closing of the Agreement. Any Additional Consideration will be payable upon the agreement or determination of the post-closing consideration adjustment process.
The consideration up to and including US$30.5 million will be payable by the Company in US dollars. Any consideration payable by the Company over that amount will be denominated in Belize dollars.
Accordingly, the overall maximum consideration payable for the Acquisition is US$35 million, which represents a Substantial Transaction for the Company for the purposes of AIM Rule 12. The Company will satisfy both the Purchase Price and any Additional Consideration by using available cash resources of CIHL, which the Board has made available for synergistic acquisitions in the banking and financial services sector in the Caribbean and Central America.
The Agreement is subject to regulatory approval and customary closing conditions. In addition, the Agreement has a condition that the notional aggregate consideration shall not exceed US$35 million. The Agreement has a long stop date for closing of 12 months from the date of the Agreement. The Company will make a further announcement regarding closing in due course.