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BNS Canada shifts Jamaican shareholdings to Barbados

Published:Saturday | March 21, 2015 | 11:03 PM
The headquarters of Scotia Group Jamaica in downtown Kingston.

Frederick Williams, chief financial officer and chief accounting officer of Scotia Group Jamaica Limited (SGJL) said Friday that tax concerns were not paramount in the decision by parent company Scotiabank Canada to transfer its complete shareholding to a company domiciled in Barbados.

The transaction is pending regulatory approval.

"Scotiabank Canada is reorganising its shareholdings to enhance corporate governance and operational efficiency, strengthen the management of our regional operations, and reinforce regional risk controls," said Fredericks in response to Sunday Business queries.

"Any incidental tax benefits will depend on the business transactions that take place, and a variety of factors including the tax laws in various jurisdictions. Scotiabank is committed to serving its customers in Jamaica, and this change will have no material impact on the operations of Scotia Group Jamaica," he said.

In a stock market notice posted late Thursday, Scotiabank disclosed that its 71.78 per cent stake in Jamaica's second largest bank would be transferred from Bank of Nova Scotia in Canada to Scotiabank Caribbean Holdings Limited, its wholly owned regional financing and holding subsidiary in Barbados.

The transaction will take the form of a block transfer of shares on the Jamaica Stock Exchange, after approvals are granted.

The banking group said that the transfer of shares is part a larger regional reorganisation of BNS subsidiaries in the Caribbean, which began in 2011.

"After the transfer, the Scotiabank group of companies will be on similar footing with many of its competitors in terms of its organisational structure in the Caribbean," said its release.

Reports out of Trinidad also indicate that its 50.9 per cent shareholding in Scotiabank Trinidad & Tobago totalling more than 89.76 million ordinary shares is also to be transferred to SCHL.

SCHL said that it has no intention of acquiring any additional shares in Scotia Group Jamaica in the foreseeable future.

Stock market rules usually require a mandatory offer for minority shares in circumstances where an entity acquires more than 50 per cent of a listed stock.

However, Scotiabank Caribbean will not be required to make the offer.

Given that the transaction is purely an internal reorganisation with no change in the beneficial ownership of the 71.78 per cent stake, the bank said the Financial Services Commission granted an exemption to SCHL on March 17 The Securities (Takeovers & Mergers) Regulations on condition that it issue a public notice in advance of the ownership transfer.