MOU signed for GNCB merger
Stabroek News
March 13, 2003
A critical step in the takeover of the Guyana National Co-operative Bank (GNCB) by the National Bank of Industry and Commerce (NBIC) took place on Monday morning with the signing of a Memorandum of Understanding (MOU).
Stabroek News understands that the signing of the agreement, which was initialled at around 11:30 am, involved personnel from GNCB, members of the Privatisation Unit (PU) and representatives of the new owners.
Final arrangements, sources further disclosed, were currently being tied up.
With the handover imminent, several of GNCB's employees are set to lose their jobs.
Cabinet on November 13, formally approved a $2.7B bid by NBIC to purchase the cash-strapped GNCB after it had been put on the market a year earlier.
NBIC whose majority interest is held by Republic Bank of Trinidad and Tobago, was chosen as the successful bidder over three other financial groups including a Canadian Consortium, RNH Investment Corporation. The other final round bidders were 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 20 minutes after the August 23, 2002 deadline as a result of a delay in the arrival of the express envelope bringing it.
The way was cleared for NBIC to take over the struggling financial institution after RNH Investment Corporation, which owns a financial intermediary, First International Capital and which had entered the highest bid, had withdrawn its bid at the last minute. GNCB which has been in operation for the 33 years, had over the last five been experiencing massive losses totalling some $4.6B most of which had been given out as loans in the mid-nineties to the rice sector.
The bank's financial position was not helped by its merger with the Guyana Agricultural and Industrial Development Bank (GAIBANK) in 1995.
Its establishment which coincided with the country's attainment of republican status in February 1970, was intended to encourage ordinary Guyanese to save more while allowing them access to credit facilities.
It was also designed to promote the co-operative drive and to this end over 300 coop societies took out shares in the bank.
Meanwhile government at a recent meeting with GNCB shareholders from credit unions, offered to purchase their shares in the bank for $100 per share.
However, there is no report that the offer has been accepted by the credit unions whose umbrella body was expected to deliberate on the issue
