Friday, February 19, 2010

ECCB Responds

BASSETERRE, St Kitts, February 19, 2010 – The Eastern Caribbean Central Bank (ECCB) is staying firm in its position that the institution followed the right procedures when it intervened at the Bank of Antigua (BoA) last year, after charges were laid against owner Allen Stanford.

The St Kitts-based bank issued a statement yesterday outlining the facts surrounding the BoA intervention, in response to a class-action lawsuit in which the Stanford Victims Coalition (SVC) claim the ECCB acted illegally. The ECCB said it had the legal authority to intervene following the run on the BoA when news spread of Stanford’s legal troubles.

“The run threatened the capacity of the Bank of Antigua to remain a viable entity and in the process put at risk the interest of depositors and creditors of the bank, the great majority of whom were citizens of Antigua and Barbuda,” the statement said. “The possible failure of the Bank of Antigua also had the capacity to destabilize the banking and financial system in Antigua and Barbuda, and by extension that of the Eastern Caribbean Currency Union (ECCU) because of its participation in the clearing and settlement system.”

It said that to avoid a financial crisis it did what any banking regulator would do.

“This is the classic role of a banking regulator or lender of last resort conferred on central banks from time immemorial. In recent times, in the current crisis this is a familiar occurrence in the United States where many financial institutions have been taken over by the regulatory authorities to prevent financial meltdown and to protect depositors and creditors,” the ECCB said.

A management company, Eastern Caribbean Amalgamated Financial Company Ltd was appointed to manage BoA on behalf of the Central Bank and return it to normalcy. The company comprises representatives from the indigenous banking sector, namely Antigua Commercial Bank Ltd, East Caribbean Financial Holding Company Ltd, National Commercial Bank (SVG) Limited, National Bank of Dominica Ltd and St Kitts-Nevis-Anguilla National Bank Limited and, the Government of Antigua and Barbuda.

“Contrary to the alleged claims by the group, the Central Bank has not sold or otherwise disposed of the property, assets and undertaking of or any shareholding of the bank. The Central Bank has continued to support the institution while the management company continues to nurture the bank back to health under the direction of the Central Bank,” it said.

According to the ECCB, it has been in regular contact with the United States Securities and Exchange Commission (SEC) which filed the charges against Stanford and Ralph Janvey, the US receiver of the Stanford Estate, and neither party has challenged the legality or propriety of the Central Bank’s assumption of control of BoA.

The ECCB said that is now engaged in carrying out the legal and financial arrangements to bring a satisfactory closure to this matter.