UK Signs Off Bank Resolution Plan With Anguilla
by Mike Godfrey, Lowtax.net, Washington
21 April, 2016
The UK Government has given its assent to a package of legislation designed to shore up Anguilla's banking system in a fiscally sustainable manner.
The legislation is intended to address the banking sector difficulties that hit the island following the 2008 financial crisis. Caribbean Commercial Bank (Anguilla) Limited (CCB) and the National Bank of Anguilla Limited (NBA) were placed under conservatorship in August 2013, with the Eastern Caribbean Central Bank assuming control.
The legislation gives effect to a Bank Resolution Plan that will ensure the continuation of an indigenous banking presence in Anguilla.
Under the Plan, performing loans matched by an equivalent level of deposits of the NBA and CCB will be transferred to a new financial institution, the National Commercial Bank of Anguilla. This will be a wholly owned government bank. In due course, this bank will be privatized.
The non-performing loans will be transferred to a new financial institution, the Eastern Caribbean Asset Management Corporation.
Deposits not transferred to the new Bank, such as Social Security deposits and deposits of large depositors have been protected by legislation in the form of the Bank Resolution Obligations Act 2016.
Christina Scott, the Governor in Anguilla (the UK's appointed representative, who acts as head of state), said: "UK Ministers' objectives for a resolution to Anguilla's banking difficulties have remained consistent since 2013: to ensure the banking resolution is sustainable and affordable to the Government and people of Anguilla; and to minimize the chance of another banking crisis happening again in Anguilla."
"In 2015 the Chief Minister and Government of Anguilla decided to progress the Eastern Caribbean Central Bank's proposed resolution plan. Since then the UK Government has engaged in discussions with the Government of Anguilla, the Eastern Caribbean Central Bank, the International Monetary Fund, and the Caribbean Development Bank."
"The UK has now received written assurances on a number of points from both the Government of Anguilla and the regional financial institutions that have designed and will lead the resolution process. These include agreement to bylaws for the new bank that include safeguards to ensure sound management and oversight by a Board of Directors, ensuring arms-length accountability to the Government of Anguilla. An experienced banker has been appointed as Deputy Chair of the Board, specifically responsible for good governance."
"The Eastern Caribbean Central Bank has also provided assurances both that plans are in place for a suitably qualified individual to be appointed as the interim receiver, and also that the Eastern Caribbean Asset Management Corporation will be operational by the end of June to start its work. The Government of Anguilla has committed itself to an ambitious economic reform program, which the Chief Minister has said he will make public. The UK will support the economic reforms, and the overall management of public finances, including by funding a Financial Advisor who will work in the Ministry of Finance."
"There is much more hard work to be done in the coming months and years to realize the potential success offered by the framework of the resolution plan and the legislation. I look forward to working with the Government of Anguilla and its international partners as they deliver on assurances given in recent weeks, so that the best possible result for all the people of Anguilla can be secured."
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