Guyana’s financial and banking sector

Guyana

Richard Sammy, managing director of Republic Bank (Guyana), talks to TOGY about what adjustments Guyana’s financial and banking sector must undergo to ensure stability and attractiveness to investors, as well as the opportunities available to companies entering the local market and the challenges they will face. With 16 subsidiaries, the Republic Bank Group is one of the largest financial institutions in the Caribbean.

This interview is featured in The Energy Year Guyana 2019

• On Guyana‘s financial strengths: “There is ongoing development of the financial markets in Guyana, with several existing strengths including high levels of liquidity, a strong deposit and asset base, stable and profitable financial institutions and strengthened AML/CFT [Anti-Money Laundering and Countering the Financing of Terrorism] legislation and policy guidelines. These lay the foundation and ensure the robustness of the industry.”

• On opportunities for foreign companies: “There are multiple opportunities for investment in both the traditional sectors and emerging energy sector in Guyana. Companies entering Guyana can benefit from access to a new market with wider access to the continent, diversified revenue streams, local knowledge and expertise, and investor-friendly financial and non-financial incentives.”

What does Republic Bank see as the main strengths and weaknesses of the market?
There is ongoing development of the financial markets in Guyana, with several existing strengths including high levels of liquidity, a strong deposit and asset base, stable and profitable financial institutions and strengthened AML/CFT [Anti-Money Laundering and Countering the Financing of Terrorism] legislation and policy guidelines. These lay the foundation and ensure the robustness of the industry.
Although significant strides are being made, Guyana has been slow to new technology implementation for payment channels, electronic evidence, electronic funds transfers and mobile banking. At the macro level, Guyana is largely a cash-based economy, which inhibits alternative channel transactions and presents challenges to effective compliance regulation.
There has also been a weakening of key sectors, such as sugar, leading to increased non-performing loans and protracted realisation and development of public infrastructure programmes.

Despite these weaknesses, what opportunities are available to companies entering Guyana?
There are multiple opportunities for investment in both the traditional sectors and emerging energy sector in Guyana. Companies entering Guyana can benefit from access to a new market with wider access to the continent, diversified revenue streams, local knowledge and expertise, and investor-friendly financial and non-financial incentives.

What is the best approach to banking and financing for foreign companies entering this market?
In the first instance, companies should conduct comprehensive market research via formal avenues – government ministries and agencies, e.g. the Ministry of Business – and informal avenues for pre-requisite details on doing business in Guyana. Entities also have the option of obtaining advice and guidance from well-established local accounting and legal firms for the registration, structure and establishment of businesses.
Republic Bank (Guyana) has strong relationships with such firms and is referred on an ongoing basis for the establishment of accounts and serving the financial needs of new entrants. Staff at our locations are well trained, experienced and equipped to assist with on-boarding new clients via establishing accounts and extending credit facilities to facilitate business growth. Prospects can receive valuable information and insight via digital conversations and our web or social media pages.

What changes are required for banks to be less risk averse than they are now?
While each commercial bank is guided by a specific risk appetite, there needs to be greater co-operation among credit agencies – including credit unions, utilities companies etc – in providing the relevant information to the credit bureau to improve the integrity of customer credit ratings.
Increased sharing of risk via public- and private-sector structures, investor-friendly financial instruments and credit enhancements for transactions and projects would also facilitate a change in risk tolerance. Updated national statistical information is also critical to inform decision making.

What financial sector regulations need to be put in place to ensure more stability?
Several financial sector regulations are already established in Guyana that redound to the benefit and protection of the market. To supplement the existing regime, there should be the introduction of regulation that fosters the development of capital market activity and promotion of an active equity and stock market, implementation of the public-private partnerships policy and treatment of non-performing loans. Critical to the success of financial sector regulations is a transparent, collaborative and fair enforcement process framework.

How has Republic Bank been involved in the development of Guyana’s energy industry?
Republic Bank hosted the first ever group trade mission to Guyana in November 2016, to sensitise regional businesses to business prospects, introduce delegates to local businesses and provide insight on doing business here. The two-day event saw participation from more than 200 businesses from Trinidad and Tobago, Guyana, Barbados and Suriname. Speakers included ministers of government, foreign local investment agencies, Caricom [Caribbean Community] representatives, legal and accounting experts, energy experts, local and regional business representatives and Republic Bank.
Republic Bank (Guyana) has established an internal Oil & Gas Steering Committee comprised of corporate and commercial managers, branch heads and market specialists, specifically geared towards strong research and anticipating needs of clients in this new sector.
Our staff was availed sector-related training provided by DAI’s Centre for Local Business Development in Guyana, and we have also benefited from presentations facilitated by external energy parties such as ExxonMobil’s country manager.
Through our sister subsidiaries, particularly Republic Bank Trinidad, we are able to extend the type of financial instruments to meet the sector’s needs and, in this regard, have booked the largest single credit facility in the energy sector. We maintain strong relations with all energy and oil and gas players, including energy chambers, publications, seminar organisers and industry experts.

What are Republic Bank’s strategies and prospects for 2019 and beyond?
Republic Bank remains committed to driving growth and development in Guyana through continued financial support in the traditional sectors, deepening activities in the emerging oil and gas sector and assisting with select government-led initiatives to diversify the economy. We are bolstering services for SMEs in Guyana, arising from the demands of the emerging oil and gas sector.
The bank will be upgrading its core technological platform and expanding offers such as wealth management and private and personal banking to greater align to the Republic Bank Group, to meet the changing needs of the market. There will be continuous training, engagement and development of our human resources, and a focus on offering a seamless and consistently satisfactory customer experience supported by enhanced information technology and a review of our sales approach.
Through management of operating cost and the restructuring of systems and procedures, the bank will drive improved operational efficiency while continuing to invest socially for the greatest impact under the bank’s Power to Make a Difference programme.

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