Humpty Dumpty sat on a wall
Humpty Dumpty had a great fall
All the King’s horses and all the King’s men…
How will this chapter end? The fragility of the Anguillian economy has never been more clearly demonstrated as on Monday 12th August 2013. On that fateful day, all the King’s men – a delegation of representatives from the Eastern Caribbean Central Bank (ECCB), the International Monetary Fund (IMF) and the World Bank – swooped in and assumed control of the National Bank of Anguilla Ltd (NBA) and the Caribbean Commercial Bank (Anguilla) Ltd (CCB), with the intention of stabilising and restructuring both banks and returning them to a state of normalcy – protecting depositors and creditors, and ensuring the stability of the banking system in Anguilla and the Eastern Caribbean Currency Union (ECCU). The assumption of control was authorised by the ECCB’s Monetary Council comprising the Ministers of Finance of the eight member countries of the Eastern Caribbean Currency Union in accordance with the ECCB Agreement Act.
Sir K Dwight Venner, Governor of the ECCB, led the takeover delegation and, in a press statement, outlined the circumstances that led to the action being taken. In particular, Sir Dwight pointed to the impact of the global crisis on Anguilla’s tourism and construction sectors and the spin off effects this has had on the banking system. According to him, growth in Anguilla has virtually collapsed and the non-performing loans at the two banks in question have escalated beyond the ECCB guidelines. It was clear from his press statement that both banks have been under close scrutiny for some time and, based on investigations, there was increasing concern about the performance and condition of the two institutions. His statements confirmed the suspicions of the public about the stability of both local banks. The gravity of the situation was underscored by the realization that there had been ongoing discussions with the Foreign and Commonwealth Office (FCO), the IMF and the World Bank in relation to these banks.
In essence, it appears that the ECCB and other supporting agencies are on a rescue mission in Anguilla. This implies that there is hope for recovery. I do not anticipate that this will be easy as already demonstrated by the removal of directors and senior management of both banks. However, the importance of the cooperation of the public to the success of the mission cannot be overemphasized. In fact, it is so important that this well-orchestrated intervention included a virtually flawless public relations strategy. Apart from the statement issued by Sir Dwight, the public has been reassured by the Honourable Chief Minister, Her Excellency the Governor, the Honourable Dr Denzil Douglas (Prime Minister of St Kitts and Nevis and Chairman of the Monetary Council) and the Honourable Dr Kenny Anthony (Prime Minister of St Lucia and Chairman of the Ministerial Sub-committee on Banking) that the situation is under control – that the banks are in the hands of experienced professionals. And they advised the public to remain calm and conduct business as usual. Their statements were later supported by the Chairman of the Anguilla Social Security Board and the Chairman of the Anguilla Chamber of Commerce and Industry.
It should come as no surprise, however, that the actions taken have not been well received by everyone, particularly ousted directors and managers. After all, the fact that the ECCB, IMF and World Bank had to step in does imply that the governance mechanisms of both institutions were unable to successfully navigate these challenging times. Whether as a result of bruised ego or firm conviction, the Chairman of the CCB Board of Directors,Mr Leslie Richardson,issued a press statement in which he condemned the intervention as unjustified and expressed disappointment that the Honourable Chief Minister, Hubert Hughes, supported it. According to him, CCB is not in financial difficulty and the actions of the ECCB are highhanded and unnecessary. In his very strong statement, Mr Richardson indicated that the CCB is exploring all legal remedies. He also indicated that there has been constant pressure from the ECCB for the two local banks to merge as part of efforts to stabilise the ECCU and that this is the real reason for the intervention.
Only time will tell whether Mr Richardson is correct, in all respects, about the motivation for the intervention. However, we would be naive to believe that the intervention is only in the interest of the people of Anguilla. The reality is that the collapse of the two banks would be extremely detrimental to the ECCU, and therefore all countries which are part of the ECCU have an interest in ensuring a successful outcome from this intervention. We would also be naïve to believe that these banks are not in financial trouble. Therefore, regardless of the other interests being served, we must recognize that as a country it is in our overall best interest that these banks recoup successfully. Regrettably, I am almost certain that the recovery efforts will result in several casualties along the waybut, with the expertise that these agencies bring, we have to trust the process. With our support, it may just be possible that all the King’s men could put NBA and CCB together again… individually or collectively. Any other ending will have disastrous consequences for Anguilla and the rest of the sub-region. The stakes are high and we must use our collective will and wisdom to rise to the task at hand.
