ST. JOHN’S, Antigua, Monday July 25, 2011 – The Eastern Caribbean Central Bank (ECCB) has taken over a second bank in Antigua and Barbuda to prevent it from collapse, after it failed to meet it statutory and other obligations.
The ECCB and the Government announced that the indigenous Antigua and Barbuda Investment Bank (ABI) is under its control, effective last Friday July 22. This comes just over two years after the ECCB took over Bank of Antigua (now Eastern Caribbean Amalgamated Bank) following a run on the bank when owner Allen Stanford was charged with a multi-billion-dollar fraud.
Finance Minister Harold Lovell said ABI Bank’s ability to meet its statutory obligations and to carry out normal banking functions has been challenged because of insufficient liquid assets.
“The affairs of ABI Bank will now be carried out by ECCB staff, with the support of a dedicated group of banking specialists and the current staff of ABI Bank. Together, they will resolve the issues that led to this action, and ensure the continued operations of the bank,” he said.
Lovell sought to assure that the Government of Antigua and Barbuda will continue to work with the ECCB to ensure that all steps are taken to protect the interests of depositors and creditors of the bank.
“We ask for the support and patience of depositors and creditors of ABI Bank and the understanding of the public in general during this time,” he said. “We are confident that our collective actions will restore the bank to normality, and maintain stability within the banking system.”
ECCB Governor Sir Dwight Venner said that normal banking operations will continue at the three branches of the bank and no disruption of activities is contemplated.
Both officials explained that in agreeing to the ECCB takeover of ABI Bank, the current economic conditions in Antigua and Barbuda, the lingering effects of the global recession, the CLICO/BAICO issue, and the best interests of depositors were taken into consideration.
“We also took into consideration the successful Bank of Antigua rescue, and the need to maintain financial stability in Antigua and Barbuda, and, by extension, within the Currency Union,” Lovell added.
Prime Minister Baldwin Spencer pledged his Government’s full support to the Central Bank in its efforts to resolve the challenges facing ABI Bank.
“Let me assure you that the Government of Antigua and Barbuda is fully committed to preserving the safety and soundness of the banking system in Antigua and Barbuda and we are confident that the collective actions taken by the Government and the Central Bank will serve to maintain your confidence in the bank and the financial sector as a whole,” he said.
“The Government’s commitment to financial sector stability is resolute and firm.”
Support for takeover, criticism for government
Support for the ECCB takeover of ABI Bank has come from several quarters in Antigua and Barbuda, including the business community in general and bankers in particular.
In a brief statement issued over the weekend, the Antigua and Barbuda Bankers Association said it stands in full support of the ECCB and the local bank.
“Safety and soundness of our banking system is a compelling imperative that we face. In this regard, all financial institutions are committed to working together to ensure that normal banking relations are maintained,” it said.
“The Association is confident in the proven track record of the ECCB and the collective approach taken by the ECCB, The Government of Antigua and the financial community to keep our banking system safe and sound.”
In its statement the Antigua and Barbuda Chamber of Commerce and Industry said it is assured that through this intervention, the bank’s operations will continue as normal and the interest of the customers and other stakeholders is protected.
“The Chamber therefore appeals to its members and the general public to continue their banking and financial activities as normal with the ABI Bank. This action will demonstrate confidence in the bank and allow for stability within the local banking system and the Eastern Caribbean Currency Union,” it said.
The Opposition Antigua Labour Party (ALP) is also backing the takeover.
Opposition Leader Lester Bird and his deputy and party chairman Gaston Brown, both of whom were officially informed by Prime Minister Spencer about it, said the move was necessary and called for calm among depositors.
Brown, a former senior banking executive, made it clear that he did not see the matter as a partisan political one, but rather as “a national issue”
He said that once the ECCB Governor and his team of experts are allowed to remedy the situation, “not only will this bank once again be a strong indigenous contender of which we can all be proud of, but it will also keep stability and extend confidence to our local banking system.”
Although acknowledging that the ECCB intervention was necessary, Bird lamented that it did not happen earlier.
“It is unfortunate that the Ministry of Finance did not itself act to correct deficiencies at the bank at a much earlier time, so that an ECCB intervention would not have been necessary,” he said, as he accused the ruling United Progressive Party (UPP) administration of contributing to the bank’s demise.
“The truth is that the present government contributed significantly to the weakening of ABI Bank and its failure to meet its statutory obligations. The government over-borrowed from ABI Bank, ignoring statutory limitations. When the government could not repay its debt to ABI Bank, it placed the bank in an untenable position,” he said.
ABI Bank, the flagship of the ABI Financial Group, has been in operation for just over 21 years, having opened on March 1, 1990 when it acquired the collapsed Fidelity Trust Bank.