It’s official! The Government has reached agreement with the East Caribbean Financial Holding Company Limited (ECFH) of St. Lucia, (parent company of the Bank of St. Lucia Limited), on the privatization of the National Commercial Bank (NCB).{{more}}

This announcement comes two months after Prime Minister Dr. Ralph Gonsalves, disclosed that the NCB is seeking to conclude the necessary negotiations with a regional bank, for the purchase by that bank, of majority share holdings in the NCB. Gonsalves had made the disclosure at the Thursday, August 5, sitting of Parliament.

The agreement will see the ECFH holding majority ownership interest of 51 per cent. The Government of St. Vincent and the Grenadines will retain the balance of shares (49 per cent), with the intention of divesting an additional 29 per cent of their shares to the St. Vincent and the Grenadines National Insurance Service (NIS), citizens of St. Vincent and the Grenadines, including bank staff and citizens of the region, within the next twelve (12) months. All formalities of the ECFH acquisition are expected to be finalized by the 31st of October, 2010.

Word of the agreement came on Friday, October 1, in a press release issued by NCB.

The deal was reached following the invitation by the Government of St. Vincent and the Grenadines to ECFH to consider acquiring an interest in the state owned bank.

“In pursuance of the Government of St. Vincent and the Grenadines’ stated policy on the privatization of the Bank; the ECFH Group’s vision of regional expansion and in support of the Eastern Caribbean Central Bank’s (ECCB) efforts at strengthening the banking system through mergers and alliances, ECFH was pleased to accept the invitation,” said the news release.

The press release further stated that the agreement is subject to regulatory approval of the ECCB; however, this approval is expected to be forthcoming.

At the August sitting of Parliament, Prime Minister Gonsalves had disclosed that as early as the incumbent Unity Labour Party’s (ULP) first term in office, the bank had been exploring the idea of establishing a strategic partnership with a larger bank.

The Prime Minister explained that there are benefits to the NCB in upstreaming into a larger regional bank.

These include: access to a larger pool of core resources, including funding and support for other corporate activities; human resource development; training; risk management capabilities; finance fund management; marketing; operation systems and procedures; and policy development.

He said at the moment, the NCB, as a small indigenous bank, has limitations. For example, if a request is made for loan of EC$12 million, the individual will encounter difficulty in getting it, said Gonsalves.