The Bahamas’ “significant scale” yesterday prevented its inclusion among nine Caribbean jurisdictions that Scotiabank has announced it plans to exit via a $123m deal.

The Canadian-owned bank, in a statement released yesterday, revealed it is selling its operations in “non-core markets in the Caribbean” - identified as Anguilla, Antigua, Dominica, Grenada, Guyana, St Kitts & Nevis, St Lucia, St Maarten and St Vincent & the Grenadines - to Trinidad’s Republic Bank.

Scotiabank, though, is maintaining its presence in larger Caribbean territories that yield greater scale and profits, including The Bahamas, Barbados, Jamaica and Trinidad & Tobago. The sale appears exclusively focused on smaller, more insignificant markets where ever-increasing costs and the growing regulatory/compliance burden make it hard to justify a continued interest.

“Due to increasing regulatory complexity and the need for continued investment in technology to support our regulatory requirements, we made the decision to focus the bank’s efforts on those markets with significant scale in which we can make the greatest difference for our customers,” Ignacio (Nacho) Deschamps, Scotiabank’s group head of international banking, said.

“Scotiabank is committed to the Caribbean, as demonstrated by the bank’s ongoing investment in products, services and processes to provide an enhanced banking experience to customers across the region.”

The Canadian-headquartered bank is also selling its Jamaica and Trinidad-based insurance operations to Sagicor Financial Corporation, the Barbados-based insurer which holds a 20 percent equity stake in Family Guardian.

Scotiabank’s move yesterday further confirms long-held suspicions that the Canadian-owned banks, including Royal Bank of Canada (RBC) and CIBC, have been seeking an exit route from a Caribbean region which has dragged their earnings and balance sheets down since the 2008-2009 recession as a result of the explosion in non-performing loans.

CIBC FirstCaribbean International Bank’s aborted $240m New York initial public offering (IPO) earlier this year was to have been the start of that institution’s exit through selling down its equity, after efforts to achieve a single sale of its whole Caribbean business proved impossible to pull off.

Meanwhile, there were signs that Scotiabank’s deal with Republic Bank is already running into regulatory headwinds, with Antigua and Barbuda’s prime minister already expressing displeasure that local banks had not been given a chance to purchase operations in that country.

Gaston Browne, in a letter to Scotiabank’s top executive in Antigua, said: “On behalf of my government, I advise that I am deeply disappointed that the authorities of the Bank of Nova Scotia would decide to sell its operations in Antigua and Barbuda without any form of consultation with the regulators or the finance minister whose agreement and authority for such a sale are required by law.”

Branding this as “unacceptable”, he added: “Should the Bank of Nova Scotia wish to divest its operations in Antigua and Barbuda, it would be necessary to seek the government’s approval. In this connection, my government would strongly commend that such divestment should be offered first to local banks as the priority.

“Indeed, I am aware that, notwithstanding the unexpectedness of Bank of Nova Scotia’s announcement, a consortium of such banks has already expressed an affirmative interest to acquire.”

Mr Browne concluded: “I am further deeply concerned that the Bank of Nova Scotia would spring such an important decision on the people of Antigua and Barbuda, particularly its many clients who have displayed great loyalty to the bank for almost 50 years, providing it with significant profits.”