1. 3
This project is funded by the European Union. The views expressed herein can in no way be
taken to reflect the official opinion of the European Union nor that of the ACP Secretariat.
Introduction
Addresses
Consultant Presentation of Diagnostic Study and Open Discussion
Presentation and Consideration of Case Studies
Open Discussion: Moving towards Tentative Agreement
The Agreement and Resolution
4
4
7
8
8
10
CONTENTS

2. 4 Enhancing Financial Servic es in the Eastern Caribbean through the Consolidation of Synergies among Indigenous Banks
Sir Edmund Lawrence, Managing Director, St Kitts-Nevis-Anguilla National Bank,
Chairman Eastern Caribbean Amalgamated Bank, Chairman ECIC Holdings Ltd
Introduction
This brochure summarizes proceedings of the Validation Work-
shop, which was held on 21st and 22nd September 2012 at
Eastern Caribbean Central Bank in St Kitts, for a project entitled:
“Enhancing Financial Services in the Eastern Caribbean through
the consolidation of synergies”that was led by ECIC Holdings Ltd,
a company held by most of the sub-region’s Indigenous Banks,
and supported by the ACP Climate facility (BizClim). The project
is aimed to contribute to the identification of feasible and viable
options for collaboration to realise available synergies among
participating banks.
This private Workshop brought together about 30 chairpersons
and chief executive officers of all Indigenous Banks from the sub-
region with high-level representatives of the Eastern Caribbean
Monetary Council, Central Bank and the Caribbean Development
Bank.
Participants considered the preliminary findings of a Diagnostic
study that mainly looked at viable options for collaboration to
realise synergies among participating banks. This project, com-
prising the study and workshop, was ECIC’s contribution to the
general effort and was thus complementary to other initiatives
aimed to enhance financial services, especially Eastern Caribbean
Single Market and Monetary Council eight-point programme.
Central bank, Monetary Council and international donors and
agencies were kept informed during implementation.
The study had been prepared by BizClim project experts just
before the Workshop. It took into account public documents,
international experience, and discussions with the Boards,
management and technical staff of participating banks and other
stakeholders held during August and September 2012.
Options to consolidate synergies among Eastern Caribbean
Indigenous Banks were presented and considered at the Work-
shop. How would these important banks be able to continue to
provide financial services efficiently for national and regional
socio-economic development? How have banks internationally
taken advantage of synergies to add value? What lessons can be
learned from elsewhere about how Indigenous Banks can cap-
ture opportunities emerging from the Eastern Caribbean Single
Market and to meet specific priorities in the sub-region’s eight
point Stabilisation and Growth Programme?
The project is expected to conclude with the acceptance of
documents by ECIC, documents that could be the basis for wider
discussion and decision about consolidation or amalgama-
tion. Specifically, the consultants have to produce a Final Report
with options for collaboration, including providing information
about possible financial, ownership and organisation arrange-
ments and structures, and an Action Plan with timeline, costs
and requirements for the execution of potential options in a
phased strategy. Project success will be evaluated by how much
Indigenous Banks are equipped to better serve the needs of the
Eastern Caribbean.
The exercise was not an evaluation of any bank or indeed of any
aspect of the sub-regional financial sector. Rather – given the
general acceptance that re-structuring is needed - the voice of
indigenous banks needs to be decided by them and then heard
by others and the project title -“Consolidation of Synergies”,
whatever they may be – reflects this. Thus ECIC Holdings insisted
the experts carry out their work with open minds and without a
preconceived plan.
Addresses
The Chairman of ECIC Holdings Ltd, Sir Edmund Lawrence,-who
was thanked by both the Prime Minister of St Kitts and Cen-
tral Bank Governor for his substantial personal contribution in
respect of the matters under consideration – opened and closed
the first day of discussions.
Sir Edmund Lawrence sees the workshop as springboard for
moving forward the process of consolidation of synergies
among Indigenous Banks
Welcoming participants, Sir Edmund noted that all previous ac-
tivity and discussion about the consolidation of synergies among
Indigenous Banks had converged at this Workshop, which had
become a springboard for moving the process forward. He
wrapped up with a call for action, as the consolidation of syner-
gies among the indigenous banks in the Currency Union will
contribute immediately and immensely to the banks sustainable
capacity toundertake the following actions amongst others:
§ Provide not only small and medium but also especially
large credit facilities to businesses in the commercial,
industrial and tourism sectors of the economy;
§ Stimulate increases in jobs, aggregate demand and
exports;
§ Spur private sector investment and drive household
spending;
§ Foster optimism; promote high expectation and unleash
new and renewed energies to build a bountiful economic
future for everyone in the Currency Union.
Sir Edmund recalled that“During our rounds of meetings with

3. 2-Day Validation Workshop | 21-22 September 2012 | ECCB, St. Kitts 5
The Rt Hon Dr Denzil Douglas, Prime Minister, St Kitts and Nevis and Chairman of the
ECCB Monetary Council
Honourable John Skerritt, Financial Secretary, Montserrat
The Rt Hon Dr Denzil Douglas, Prime Minister, St Kitts and Nevis and Chairman of the
ECCB Monetary Council
the Boards of Directors, the CEOs and other senior staff of the
indigenous banks in the Eastern Caribbean Currency Union we
discussed the artesian store of boundless advantages and the
cornucopia of lasting benefits that consolidation of synergies
among indigenous banks would generate. In our deliberations
we respectively and representatively iterated that by working to-
gether indigenous banks would produce a combined result that
is greater than the sum of their separate results. The varied and
myriad advantages, benefits and gains, whether human, institu-
tional, material, financial, operational, technological or other-
wise, were seen as gross, not as net, because all of the envisaged
results were considered positive, none was negative”.
The consolidation of synergies among indigenous banks is a pro-
cess, it is not a product
Sir Edmund concluded“As the representatives of the indigenous
banks in the Eastern Caribbean Currency Union we are given the
special and singular honour, privilege and distinction to run the
first leg of this historic generational race. We must run the race
with an avowed intent never to relent but to remain undaunted,
fortified with stamina, perseverance and patience. We must win
our leg of the race and pass the baton safely to our successors.
We are not running with or against ourselves. We are running
against competitors who are practised, seasoned and resourced.
However, we must draw on our ancestral valour to defend the
honour of our institutions and Union, and win our leg, the first
leg, of the race. Now is the time for the indigenous banks in the
Currency Union to start coming together and working together
to reposition ourselves in our Currency Union. Now is the time
for us to stop walking separately and denying us the opportunity
to achieve and sustain domestic ascendancy in the Currency
Union. Our most urgent need is a steely will and an unwavering
belief in ourselves and our capabilities to fashion our future with
the continued assistance of our partners and friends who sup-
port our efforts and want us to succeed“.
Both the most recent and current Chairmen of the Monetary
Council - the Prime Minister of the Federation of St Kitts and
Nevis and the Financial Secretary of Montserrat - addressed the
workshop.
The Rt Hon Dr Denzil Douglas invited the meeting to review
the suggested options, to identify those that served the
best interest, not only of the institutions, but also that of the
region
The interest of the institutions and the region were intricately and
inescapably inter-twined
The Prime Minister of St. Kitts, Rt Hon Dr Denzil, acknowledged
the Indigenous Banks’s contribution to the region and to the
growth of the people of the region. He noted that Indigenous
banks were the most potent symbol of the region’s‘coming into
our own as our own people.’He encouraged the meeting to iden-
tify and seize opportunities of synergistic cooperation that would
benefit the people and businesses they served. He pointed out
that the region occupied its own unique space in the global
financial landscape and therefore could not adopt the whole-
sale approaches that might have worked elsewhere. However,
other examples of indigenous banks, which had capitalized on
synergies in various areas should be analysed. Finally, he invited
the meeting to bear in mind the eight-point Stabilization Action
Plan; the fact that Eastern Caribbean Securities Market had long
been a priority; and the vagaries of the global economy, which
were inescapable.
The Hon. John Skerritt, Financial Secretary, Montserrat, having
acknowledged the“irreplaceable contribution”of the Indigenous
Banks in providing access to finance in the region, noted that
consolidation would provide a collective response to threats, cit-
ing the examples of CIBC, RBC and RBTT - which had responded
to competition in such a way as to increase market share and ser-
vices, while increasing shareholder value - and noting the falling
earnings, increasing levels of non-performing loans, increased
provisioning for bad loans of the Indigenous Banks.
Hon Skerritt stated his belief that any attempt at consolidation
would require commitment and compromise, and thus the
workshop was timely. He concluded:“our indigenous banking
institutions are generally weak and under threat. What will you
do about it?”He encouraged banks to be guided by the policy
framework provided by the Monetary Council and the central
bank through the stabilization programme.
The Governor of the Eastern Caribbean Central Bank deliv-
ered the keynote address. He described the significant role the
Indigenous Banks had in the region and stated that they needed
to build capacity to fulfil that role. He remarked that the Treaty of

4. 6 Enhancing Financial Servic es in the Eastern Caribbean through the Consolidation of Synergies among Indigenous Banks
Sir K Dwight Venner, Governor, Eastern Caribbean Central Bank
Christine Dawson, Chief Economist, Caribbean Development Bank
Basseterre had created a single financial space and thus provided
the opportunity for banks to consolidate and realise economies
of scale, which foreign banks understood and were already tak-
ing advantage of this opportunity.
The Governor highlighted:
§ The need to re-think the Indigenous Bank business model,
and that the preferred model should suit the population
of the region and should take into consideration both
specialized and universal banking theories.
§ The region was facing a period of uncertainty due to the
global recession and banks needed to determine what
their role should be in the current environment. The
financial sector was facing a number of challenges and it
was important to identify the form of the financial system,
which was compatible with the region and its economies.
§ It was important to examine other banks that had been
successful and learn from their successes. For example,
a review of Canadian banks would reveal that they had
expanded by moving out from their original country,
overcoming the disadvantages related to small size, such
as high risks.
The Governor also noted that the Monetary Council had recog-
nized:
§ Importance of indigenous banks and their role in the
financial system;
§ Banks should be organized to facilitate intra-ECCU trade;
§ Indigenous banks should assist in the development of
Money and Capital Markets and in particular the Govern-
ment Securities Market.
The Chief Executive of Bank of Anguilla, Mr Valentine Banks, and
a Director of Grenada Co-operative Bank, Mr Darryl Brathwaite,
made opening addresses.
Mr Banks noted the important role that Indigenous Banks
played in the development of the region, citing in particular that
National Bank of Anguilla had made possible home ownership
through providing financing to people previously denied it, and
that the formation of Caribbean Credit Card Corporation (4Cs) by
the Indigenous Banks had allowed them to issue credit and debit
cards. But Mr Banks also noted that today the bank’s customers
have more varied demands and expectations.
Mr Brathwaite said that participants were well aware of the ben-
efits of achieving synergies, but the challenge was in convincing
members of the Banks’Boards of Directors that consolidation was
the way to go; and dealing with the risks and teething problems
in working towards consolidation. He encouraged participants to
network and support each other as the process moved forward.
Ms Dawson spoke for the Caribbean Development Bank. She
stated that the global financial crisis severely tested the Carib-
bean’s own financial systems, as it did the world over.

5. 2-Day Validation Workshop | 21-22 September 2012 | ECCB, St. Kitts 7
Consultant Team Leader, Mr Chris Thomas
Ms Telly Onu, IT Expert
She suggested that the most important benefits to be derived
through consolidation were:
§ the ability to enjoy economies of scale;
§ enhanced technology infrastructure; and
§ increased resilience to external shocks.
She concluded that banking sector reform and restructuring, in
whatever form it takes, should lead to the emergence of a sound,
reliable and efficient system to support growth and develop-
ment. She said that Caribbean Development Bank applauded
this initiative to develop a clear rationale, and a credible business
case for consolidation, and stated its commitment to banking
sector stabilisation and operational efficiency. She reminded
participants of her bank’s 2010 financial sector stabilisation loan
to St. Vincent to provide critical liquidity to the National Com-
mercial Bank by reducing its public sector exposure, and thereby,
facilitating its privatisation.
Consultant Presentation of Diagno-
stic Study and Open Discussion
Mr Thomas raised some questions for workshop participants to
consider:
§ What information could they share about their estimates
of the benefits of consolidation of synergies and the costs
of exploiting them?
§ Is the consultants’assessment of external factors internal
common strengths shared challenges adequate
complete?
§ What is the applicability of the cases considered? What
else do we need to know of international experience?
§ Provisionally what is your point of view about the options
and recommendations?
He described both the differences between the various Island
Indigenous Banks (e.g. their size, ownership and number of
branches) and common characteristics.
The findings of the Diagnostic Study were presented as being that
the indigenous banks shared transformational and development
achievements, but also shared exogenous challenges arising
from the global financial crisis, trend for consolidation in bank-
ing, and increasing regulatory burden as well as shared opportu-
nities arising from the Eastern Caribbean Single Market. Fur-
thermore each Indigenous Bank missed opportunities to secure
operational efficiency and issues with suppliers. Human Resource
Development, international activity and syndicated loans were
all areas where opportunities for synergy existed. IT case studies
were presented by Ms Telly Onu (IT Expert) and interpreted as
suggesting the need to consolidate data centres.
It was suggested that by working together systems, which are
locally appropriate but international standard, could be put in
place for treasury, risk, compliance and internal audit, and more
effective negotiations with correspondent banks could take
place, perhaps including exploring the possible option of the
group of Indigenous Banks becoming a Downstream Correspon-
dent Clearer as defined in the Wolfsberg AML Correspondent
Banking Principles.
The opportunities for working together for better procurement,
a common electronic transaction framework and an indigenized
core banking system were also considered. A shared Centre of
Excellence for professional development in risk, compliance, IT
governance and internal audit accompanies by research and
development in associated systems was also envisaged.

6. 8 Enhancing Financial Servic es in the Eastern Caribbean through the Consolidation of Synergies among Indigenous Banks
More formal arrangements for syndicating loans were imagined,
so that indigenous banks could work together to get a greater
share of the corporate loan market, which would result in better
diversification, and better use of liquidity.
Schemes to strengthen the balance sheet through joint risk man-
agement and liability assumption were also considered.
Ten specific recommendations were made.
Presentation and Consideration of
Case Studies
The main case study was the German Savings Banks Group,
which was presented as being a particularly relevant interna-
tional example.
Mr Bergmann first summarized the structure and basic charac-
teristics of the German Savings Banks Group, and then briefed
the meeting on their consolidation experience, particularly in
the IT area. Eventually nearly all banks had chosen to use the in-
house developed core banking system from the commonly held
IT company, but the process had taken ten years.
He highlighting general characteristics:
§ Each Savings bank was independent and would, for ex-
ample, set its savings rate.
§ A portion of the profits was used to strengthen core capi-
tal and the balance given back to the community for social
purposes
§ The banks mirrored Germany’s administrative structure
and were decentralized regional credit institutions, thus
enabling them to adapt to the local client structure
§ While each bank could decide to use another core bank-
ing system, they would not do so, as it would not be cost
effective
§ IT service providers were consolidated and as a result there
were increased efficiencies including reduced IT costs
The joint liability scheme of the German Savings Banks group,
which operates alongside German Deposit Protection schemes,
was described. Beneficial characteristics were stated to be:
§ Institution Protection, which was more that a guarantee of
deposits. It protected the entire existence of the Savings
Bank
§ Proactivity - Risk Monitoring, Ratio System, and Qualitative
Reports
§ Individual Case Rulings, which encouraged risk conscious
behaviour by institutions
§ Not perceived as an insurance and as such the system
working well
§ The structure was designed to protect the trust of custom-
ers
The Isle of Man bank case study was also presented briefly. This
bank had been owned 100% by foreign banking parent since
1961 but preserved its name and local decision-making to the
extent that it is still regarded as local.
More significantly as a case study, Capitol Bancorp example was
considered. This company defines itself as a bank development
company with chartered bank development as a core business.
Each of its members banks - despite having 51% ownership by
the holding company and each having similar business focus,
type of customers, products and services, and centralized
back office - operates independently with a local board, locally
branded name and local credit decisions.
There was some discussion of lessons to be learned from previ-
ous experience of working together (e.g. ECIC, Eastern Caribbean
Amalgamated Bank, 4Cs).
Open Discussion: Moving towards
Tentative Agreement
Mr Milton Lawrence, Chief Executive of ECIC, moderated this
and other discussions.
Mr Chris Thomas stated that this workshop had not changed the
main conclusion he reached after meeting with Management Ex-
perts and the Board members of all of the indigenous banks. This
was that the time was right for the establishment of the Eastern
Caribbean Indigenous Bank Cooperation Entity to consolidate
synergies and formally cooperate in various areas.
The other alternatives were:
§ a loose Association to try to consolidate synergies
§ Consolidation of Balance Sheets
A third alternative was then suggested by Mr Milton Lawrence,
CEO, ECIC Holdings Ltd. which was:
§ A combination of the previous two approaches which
would allow for consolidation of synergies, allowing banks
which wished to do so to pursue consolidation of Balance
Sheets, within an agreed upon framework.
Mr Thomas summed up the presentations of the previous day. He
noted that the following types of entities or arrangements had
been identified for moving the process forward:
§ Partnership
§ Lead Company
§ Held Company
§ Holding Company
§ Amalgamated Bank
§ The various synergies identified could be exploited using
the following arrangements:
Mr Thomas then went on to outline the next steps to be taken,
including the establishment of a steering committee, the involve-
ment of ECIC to enlist private and donor funding and technical
assistance, announcing a calendar of visibility events for 2013
aimed at initiating synergies in five distinct areas:

7. 2-Day Validation Workshop | 21-22 September 2012 | ECCB, St. Kitts 9
Electronicpayments
CentreofExcellence
CoreBankingSystem
ITservice
ECInd.Bank.Holdingreg./nat.
ECInd.BankAssoc.
Corr.BankingForeignBranches
Syn.Loans/JointLiabilityScheme/Liq.
Partnership x x
Lead company x x x x x
Held company x x x
Holding company x
Amalgamated Bk.
(i) Taking advantage of the Single Market and Leveraging
Inter-Bank Payments systems
(ii) Setting up Indigenous Banks Centres of Excellence
(iii) Defining and Transforming Institutional architecture,
which would likely lead to development of held ICT com-
pany
(iv) Establishment of a Task Force to look at Correspondent
and International Banking
(v) Establishment of a Task Force to consider Financial Syner-
gies in terms of Multilateral syndicated loans, Enhanced
Liquidity Sharing and Joint Liability Schemes.
Phasing was considered.
The meeting noted that the following OECS indigenous banks
were not ECIC Holdings Ltd shareholders: Bank of St Vincent and
the Grenadines, Bank of Saint Lucia, Antigua Commercial Bank,
Eastern Caribbean Amalgamated Bank and Bank of Montserrat.
But the meeting further noted the role the ECIC had played in
laying the groundwork for discussions on consolidation of OECS
Indigenous Banks and the suggestion that the option of ECIC
becoming the vehicle for consolidation be explored. To enable
the ECIC to be considered for that role it would be necessary to:
1. Invite the five (5) non-member banks to purchase shares in
ECIC Holdings Ltd
2. Conduct an assessment of the ECIC Holdings Ltd
3. Build capacity within the ECIC
4. Galvanize members to demonstrate a high level of com-
mitment to ensure success
5. Provide adequate resources to meet the objectives of the
institution
6. Communicate the plan both to Directors and Shareholders
of member banks, in a professional manner
Mr Bergmann advised that cooperation should be structured -
loose cooperation would not be enough, as no action would be
taken. He said he believed that a consolidated Balance Sheet
might be too ambitious as clients might not be open to the idea
of their local banks being part of a wider regional grouping. He
recommended structured cooperation using an existing entity
would be the right way forward. The entity would become a ser-
vice provider and would provide a service mentality. He encour-
aged banks to gain and maintain momentum trying to achieve
something quickly, which can be demonstrated to shareholders
that the Corporation can work.
While he agreed in principle that it might be best to build on
what existed, Mr Chris Thomas noted that complications in using
the ECIC Holding Ltd related to structure and the fact that only
nine of the fourteen banks were members of ECIC Holdings Ltd.
He further commented that while the history and experience of
ECIC was invaluable, it might be better to start a new institution
using the experience gained from the ECIC Holdings Limited.
The Governor referred to the current economic environment and
the situation of the Indigenous Banks and reminded participants
that they needed to act on a basis of urgency. He confirmed that
the Monetary Council had recognized the importance of indig-
enous commercial banks and that it was critical that these banks
continue to operate in the sub-region.
The meeting noted that:
1. A change management and communication plan would
be important in moving the process forward.
2. The Governor said that the central bank would share the
results of the stress tests it conducted with the individual
banks.
Mr Whitfield Harris, Director Eastern Caribbean Amalgamated
Bank and Financial Secretary, Antigua, noted that it would be
more difficult for some institutions to proceed than others. He
recommended that given the timelines, consideration be given
to proceeding on two tracks: (i) an overarching entity that would
guide the process; and (ii) identifying leaders in the process
- banks which were in a position to explore and exploit the op-
portunities, and should proceed to do so.
Identifying the option of an Eastern Caribbean-personality Indig-
enous Bank Holding Company, perhaps owned by people’s funds
from each ECCU nation, Mr Thomas stated that such an institu-
tion could hold between forty to one hundred per cent of the
shares in local entities, which would retain their national identity
and local governance and management.
Under that arrangement it would be accepted that two or more
banks might choose to amalgamate independently, yet it was
expected that such bilateral decisions would take place within
the scope of the multilateral process.
He commented that further investigation would be needed on:
(i) the likelihood and conditions of private and public invest-
ment in any proposed Eastern Caribbean Indigenous Bank
Holding Company; and
(ii) the legal and regulatory implications, especially how the
proposed holding company would complement any activ-
ity envisaged for the Resolution Trust Company.

8. 10 Enhancing Financial Servic es in the Eastern Caribbean through the Consolidation of Synergies among Indigenous Banks
Mr Thomas presented the Recommendations arising out of his
presentation.
The Agreement and Resolution
Arising out of the recommendations and the discussions of the
Workshop the Meeting approved the following Agreement:
Agreement by Participating Banks:
1. Participating Banks agree to pursue consolidation on the
basis of information gathered from the diagnostic review,
one-on-one discussions with banks and workshop delib-
erations.
2. Participating Banks agree that Consolidation of Indig-
enous banks, in the areas where synergies exist, can bring
significant added value.
3. Participating Banks agree to consider three main options:
i. Mandating a Steering Committee comprising
Representative of Indigenous Banks to pursue consoli-
dation of synergies with individual banks maintaining
their independence;
ii. Establishing a Holding Company to pursue con-
solidation of banks, including Balance Sheets, where
corporate control and major functions are directed
from the Holding Company but national identity and
local governance are preserved; and
iii. Pursuing (i) above with the option for individual
banks to pursue (ii) within an agreed upon framework.
4. Participating Banks acknowledged that other options
might arise.
Resolution:
Participating Banks resolved to:
1. Establish a Steering Committee comprising the Chairper-
sons of the Boards of Directors or their nominees.
2. Formalise the Committee’s Mandate, including confidenti-
ality provisions.
3. Define a Work Plan and Budget and Identify Funding
sources.
4. Arrange regular meetings with the ECCB to inform them of
the process.
5. Liaise with other stakeholders
This agreement was unanimously adopted by:
1. 1st National Bank St Lucia Ltd.
2. Antigua Commercial Bank Ltd.
3. Bank of Montserrat Ltd.
4. Bank of St Lucia Ltd.
5. Bank of St Vincent and the Grenadines Ltd.
6. Caribbean Commercial Bank (Anguilla) Ltd.
7. Caribbean Union Bank Ltd.
8. Eastern Caribbean Amalgamated Bank Ltd.
9. Grenada Co-operative Bank Ltd.
10. National Bank of Anguilla Ltd
11. National Bank of Dominica Ltd.
12. St Kitts Nevis Anguilla National Bank Ltd.