By Gitanjali Singh
Guyana's first merchant bank was launched on Monday night with its top executive, Dr Graham Scott, urging the business sector to wake up and realise that equity financing underpins and determines the rate of economic development.
Stabroek News
June 27, 2001
"Businesses will simply have to understand that it is far, far better to have a smaller slice of a much larger cake. Those businesses that fail to recognise this will inevitably be left behind by those who have the vision and courage to take the steps necessary to create a financial structure that can underpin and support their future growth on a sustainable basis," Dr Scott posited.
Guyana Americas Merchant Bank, in the works for several years, is now officially opened to the public. It will initially offer corporate financial advice and financial packages for clients so that their projects will look more attractive to commercial banks and foreign investors.
Licensed under the Financial Institutions Act of Guyana, GuyAm Bank is not a deposit-taking or advances-offering institution. Rather, it intends to act as a facilitator and catalyst for raising capital domestically and internationally.
It is a partnership between Secure International Trust Company Limited (SITCL), owned by the Beharry Group, the Guyana Bank for Trade and Industry (GBTI) (in which SITCL has a controlling interest) and the International Finance Corporation (IFC), the private sector arm of the World Bank. SITCL has a 50% stake in the bank, with the IFC and GBTI retaining 20% each and 10% available to workers.
GuyAm Bank is chaired by Geoffrey Bell, owner of Geoffrey Bell & Company which advises a wide range of central banks. Bell underscored that there is nothing more important than the development of a country's financial sector with a merchant bank playing a key role to galvanise economic growth.
Bell, who persuaded the World Bank to be a part of the project, said that the IFC link gives the bank special access to the international corporate market.
Boasting over 30 years experience in merchant banking, Bell sees himself as the link to markets in London and New York and assures that GuyAm Bank intends to be a full-fledged player in the domestic capital market.
He feels that a merchant bank can make a lot of difference to economies in fostering the growth of a full fledged capital market by promoting bond financing, venture capital and other sources of finance. He believes that GuyAm Bank has the potential to be a small but a growing part of Guyana's development.
President Bharrat Jagdeo, who was the featured speaker, at the forum, expressed his pleasure at being a part of the celebration launching the merchant bank and congratulated all of those involved.
He expressed confidence that GuyAm Bank will play an important role in expanding the range of financial instruments available to the Guyanese private sector. He also underscored that financial instruments are integral in the intermediation between savings and investible funds and noted that what Guyana has suffered from was a lack of institutions and instruments that the private sector could have access to.
This deficiency, Jagdeo noted, handicapped the local private sector as it could not compete on a level playing field with private sectors in other countries which had access to cheaper capital as a result of more developed capital markets.
He also noted that Guyana's financial sector is dominated by commercial banks with even non-banks offering similar types of services.
Jagdeo noted the progress made in reforms in the financial sector as well as strides on the macro-economic front to ensure stability in the financial system.
The President dubbed the merchant bank a welcome addition to the banking sector and hoped for its positive contribution to growth and development.
He also expressed the hope that Guyana would soon move from a cash- oriented economy to one where plastic plays a greater role. He urged that advances in technology be taken advantage of in this regard. Jagdeo also indicated how pleased he was that the IFC was finally in Guyana.
The IFC's representative on the board is Irving Kucznski, who said the institution was eager to invest more in the private sector in Guyana.
The IFC is the technical partner in the US$25 million project and is expected to provide US$1 million in equity financing together with a US$7 million credit line to the project.
The licence for the merchant bank operation was granted on March 16, 2000. The bank will operate out of GBTI's Regent Street branch.