The seemingly never-ending saga, over the creation of the National Commercial Bank of Anguilla (NCBA), and the borrowing of US$214 million dollars from Social Security, as part of the banking resolution, has come up afresh.
This time, the matter was referred to by both the Leader of the Opposition, Mrs. Cora Richardson-Hodge, and her colleague, Mr. Evans Rogers, during their programme Just the Facts on Radio Anguilla on Monday, March 22.
In order to give clarity to that matter, and other related matters, they brought on the programme the former Premier, Mr. Victor Banks, who had spearheaded the banking resolution during their term of office in the Anguilla United Front Government.
Mr. Banks has intimate knowledge about the closure of the former National Bank of Anguilla and the Caribbean Commercial Bank, and the creation of the National Commercial (Bridge) Bank of Anguilla. Responding to criticisms – from persons aligned with the Anguilla Progressive Movement Government – relating to the borrowing of money for the setting up of NCBA, the former Premier said:
“Very often they keep saying that there was another option the Government of Anguilla should have used. They suggested that a foreign investor should come in and take over the bank. While this may have been easy, there had been no serious proposal put forward that allowed for us to examine it. If a foreigner would have put 60 million dollars in the bank, while this is the only option to guarantee shareholders retaining some equity, that investor would have literally owned the bank – and consequently all the lands used as collateral. It would be a cheap way for him, her or company owning a bank in the Caribbean; and that option is not the one that would be liked by the World Bank, the IMF, ECCB and so forth, and certainly not by the FCO.
“This would have been a real frightening situation in light of world terrorism financing, money laundering, etc. The investor would have been literally in charge of social security and all other deposits – and this would be a nightmare for Anguilla. That option, that everybody seemed to suggest, was the easy way to get the banks [NCBA and CCB] on foot, and shareholders would have maintained their deposits – but it would have been in fact the worst possible option for Anguilla.
“The 100 percent guaranteed deposits are obviously an expensive solution for the people of Anguilla in the short term. But, in the longer term, when the bank is sold, those funds that have been used in the resolution process…could be restored and, as a consequence, allow the Government of Anguilla – now that we have a stable bank – to be able to get some benefit from the venture that we have made in terms of the resolution process.”
Speaking about NCBA’s coming transformation from a bridge bank to a commercial bank, and the loans that were involved in its creation, Mr. Banks explained: “When the sale is made, the Government will get that money which can be put towards the cost of the resolution; and we have estimated the cost of the resolution at some 350 million EC dollars. When the bank comes up for sale and the more vibrant or successful it is, the larger the price you can demand. Most importantly, in those situations, it is usual that the more you can allow the investor to have control of the banking institution, the more you can demand for it.”
