ST. JOHN’S, Antigua – The Eastern Caribbean Central Bank (ECCB) announced that as of Feb. 20 it assumed control of the Bank of Antigua to “stabilize the situation”.
The pre-emptive move came after consumer panic over the unfolding Stanford scandal led to an exodus of depositors to the three bank branches to withdraw cash.
According to a press statement issued by the ECCB, the Board of Directors of the Bank of Antigua requested the assistance of Central Bank as it saw possible liquidity problems at the Bank. The island’s Minister of Finance and the Economy, Hon. Dr. Errol Cort met with ECCB Governor, Sir K. Dwight Venner along with a number of top banking officials on February 18 to discuss an action plan in order to safeguard the financial sector of the island.
“The Central Bank is of the opinion that the current situation has threatened the interests of depositors and creditors of the Bank [of Antigua]. The Bank is likely to become unable to meet its obligations should the situation persist [and] the financial system of Antigua and Barbuda is in danger of disruption, substantial damage, injury or impairment as a result of the prevailing circumstances.
“In the exercise of those emergency powers, the Central Bank intends to take exclusives custody, control and possession of all the funds, assets and other property and undertaking of the Bank wherever situated including but not limited to funds on deposit at the Bank.
“[The Bank also intends to] carry on, manage or concur in carrying on and managing all of the business of the Bank and for any of those purposes to raise or borrow any money that may be required in the furtherance thereof to enter into any agreements or incur any obligations in the ordinary course of business, pay any creditors of the Bank if any such payment is in the discretion of the Central Bank necessary or desirable for the efficient operations of the business or protection, preservation, maintenance or realization of the assets of the Bank or take any other steps incidental to these powers if in the opinion of the Central Bank it is necessary or desirable to do so,” the statement read.
The ECCB also outlined its intentions to take necessary steps to protect the interest of depositors, provide necessary financial assistance to the Bank and acquire, sell, or otherwise deal with the Bank’s assets. The statement also revealed that the Central Bank intends to place a team of officers at the Bank to assist with the stabilization effort.
Loans with the Bank will continue to be administered by the Bank and customers are therefore required to continue to service their outstanding loans.
Hundreds of depositors at Bank of Antigua frantically moved to withdraw funds after the announcement that the Chairman of the Board of Directors of the Bank, Robert Allen Stanford, had been charged by the US Securities and Exchange Commission on February 17 on the grounds of fraud relating to US $8 billion. The island’s financial sector has since witnessed an upheaval as the future of Stanford’s many financial institutions seems uncertain.
Stanford Financial Group and other Stanford entities are currently controlled and managed by a receiver.
Bank of Antigua issued their own statement addressing their turbulent times. “Please be reassured that the Bank is taking immediate steps to reinstate public trust in the company, and restore confidence in our products and services. We are fully operational as customary. As such all customers’ request for cash, drafts and wires have been, and will continue to be met.”
A similar case had been witnessed in Trinidad and Tobago in early January when CL Financial Group fell into financial difficulty. The country’s Central Bank subsequently took control of three of CL Financial’s subsidiaries.
