My People,
I want to take this opportunity to thank the people of Anguilla for their enduring patience and tolerance as the situation with our indigenous banks continues. It is a complex matter that demands a clear strategy — and there is but one opportunity to get it right.
I will not respond on this occasion in a way that lends substance to the many unhelpful comments that inundate the media — but rather I will use this opportunity as a “teachable moment” to describe the issue in the simplest way that I can.
Fellow Anguillans, banks are companies — but there are not ordinary companies. They are licensed institutions that are granted permission to take people’s money with the promise to pay them interest on it as compensation for holding it.
• That have permission to lend people money and charge them interest according to an agreed plan.
• That have permission to hold people’s land — just in case they don’t pay. And to sell people’s land if they don’t pay.
• That have permission to take money from one group of people called depositors and then lend that same money to another set of people called borrowers.
• That can issue plastic cards with which they charge people fees and interest — to spend, sometimes, their very own money.
• And that are allowed to create their own instruments of transactions like checks that may be accepted in place of legal tender/currency.
For that kind of authority; privilege and responsibility as well as many others — banks require a licence that is granted by an authority/agency/institution established to supervise and regulate the execution of those privileges. These are called regulators. Often such agencies are called Central Banks.
By virtue of their terms of establishment, these agencies/institutions have the right to regulate on the basis of laws, rules and guidelines that the banks under their jurisdiction have agreed to be regulated.
The job of such regulators is to make sure that the customers are treated fairly; their deposits are protected; and that the borrowers can and are repaying the depositors money.
Regulators are given powers under the law to set a number of benchmarks and standards that the various banks under their supervision must observe — if they want to operate under the terms of their license.
The Regulator has the right to determine when it should step in to protect customers — if the Bank does not meet the benchmarks and guidelines of their license.
When the Regulator agrees that it must step in — it has sweeping powers to take over and run the bank based on the agreement.
At that point it can remove Directors and take whatever actions it deems necessary to protect customers within the terms of its agreement.
The shareholders of a Bank are investors — just like any other investor in any other company. They make their investment without any guarantees. In other words, they have taken a risk. If their investment is successful they stand to make a very large return or profit. If on the other hand it is not successful they stand to lose part or all of their investment.
To ensure a successful outcome for the investment they have made, the shareholders appoint qualified Directors who in turn hire qualified Management and Staff to handle the business.
Whether they lose part or all of their investment — depends on an assessment that is made after all the creditors to the business have been satisfied. This valuation of shareholder’s interests is referred to as EQUITY.
A shareholder’s equity is decreased or completely eroded in relationship to the ability of the company to meet its financial obligations. Equity can therefore only be accurately determined when creditors/customers have been satisfied.
A Regulator is responsible for making sure that the process of satisfying the customers of the bank is fairly and legally conducted.
In the case of Anguilla we as a “sovereign state” granted the authority for the regulation of our Banks to the Eastern Caribbean Central Bank, thirty years ago in 1985. Based on the structure of that institution our Minister of Finance is a Member of its Governing Body.
The role of our Central Bank/ECCB is also to issue and manage the currency of the region where it is circulated as legal tender. Every regulatory authority does not have that power. However, the ECCB has the dual roles of being the Regulator and the Currency Manager for the Currency Union of which Anguilla is a part.
So we are here as a people in several capacities: as customers; as shareholders; as citizens of Anguilla; and as part of the Currency Union.
But the issue we have in Anguilla today is about the indigenous banks — that are now under the conservatorship of our regulator. The regulator may have stepped in to stabilize the situation from a regulatory standpoint, but at the end of the day responsibility remains with the Member State to drive a solution, to the extent that it is required.
In doing so it can implement a solution — based on its capacity to achieve long-term stability and other desirable objectives. The task to lead that process falls to the Government — at this time the Government that I lead.
It is not a political process that will achieve this objective. It is a technical and authoritative process guided by a clear set of objectives communicated to the people of Anguilla.
Right now it is not the whole country of Anguilla that needs to be fixed — it is limited to addressing the situation at the two indigenous Banks. However, the Government has determined that it is important for the overall economy that it must be fixed.
Dealing with institutions that are based on trust is a delicate matter. If we say the wrong things or even say things that are perceived to be wrong — we can erode that TRUST and eventually destroy the integrity; credibility and viability of the institution.
For example if you are operating a restaurant and someone spreads a bad rumour about its hygienic conditions — you can lose your patrons — and as a result your business will fail.
Similarly, as we deal with the situation in the Banking Sector, no unfounded rumour nor even speculation is useful or helpful to the process of implementing a solution. A solution must be carried out in an atmosphere of calm and with responsible leadership and action.
We are confident that the situation with the indigenous banks will be fixed. And we are equally confident that we are equipped to fix it. Our predecessors with technical support were contemplating a set of solutions. It is now our responsibility to implement viable solutions to fix the problem. We appreciate that time is running and deeply appreciate the patience shown by all to date. We are making real progress towards a plan for resolution.
Like the restaurant with the bad rumours — our job becomes more difficult in an atmosphere charged with rumour; speculation; and mischief.
The people of Anguilla have been extremely patient for some twenty-two months. That period includes the three months that have elapsed since our Government came to office. We ask you for your continued patience and thank you for that you have shown so far. A resolution will be forthcoming.
I have gained the reputation to be one of the fixers in every government that I have been a part of— and I will lead the fixing in this one as well.
Let us therefore grit our teeth and weather this challenge to a successful conclusion.
As a part of the process so far — I have met with small groups, including customers; NBA/CCB shareholders; the Leader of the Opposition; selected technicians; ECCB; FCO; Ministry of Finance Task Force; Governor’s Office; Attorney General’s Chambers; Community Groups; personal advisers; and so on.
However, to take the issue to the level of a full-blown public debate, as a number of persons have been suggesting, is not wise given the risks of misinformation mentioned earlier. Viable solutions for highly technical issues are seldom derived from a political process.
Banking business is confidential business. No one wants the public to know their financial affairs — that is why it is a matter of law that if that confidentially is breached or broken it carries strict penalties.
It is therefore important that documents that include personal and confidential information should have restricted circulation. The entities that are required to process or examine such information are the only ones that need to have sight of that information — Not Facebook nor Twitter!!!
The people of Anguilla need to know that the Government of Anguilla is committed to the following:-
• Ensuring that the interests of all customers are protected and fairly treated.
• Ensuring that Anguilla retains the majority shareholdings in the indigenous banking sector.
• That the Government of Anguilla will do what is required to ensure that the underlying economic situation on the island is improved to create more jobs; business opportunities; investment and training.
• Enact laws that are fit for the purpose of effecting a solution in the interest of the people of Anguilla.
• Ensure that the jobs and benefits for the staff of our indigenous banks are protected for the long term.
Your Government is fine-tuning its strategy for realizing all of these goals and objectives as I speak. I would therefore like to take this opportunity to reaffirm our commitment to that task in the interest of all the people of Anguilla.
May God bless us all and may God bless Anguilla!
I thank you all for your kind attention.
(Published without editing by The Anguillian newspaper.)
