The Anguilla Government has underscored its stated commitment to protect the savings of depositors at the National Bank of Anguilla and the Caribbean Commercial Bank, both still under ECCB conservatorship, by the passage of an enabling Act in the House of Assembly.
The legislation, called the Bank Resolution Obligations Act, 2016, was piloted through the Assembly by Chief Minister and Minister of Finance, Mr. Victor Banks. Its passage, late Wednesday evening, March 30, came as various arguments linger on in favour of, or against, the banking resolution put forward by the Government. According to Mr. Banks, the process being taken forward by the Government not only has the involvement and support of the Eastern Caribbean Central Bank, but as well as that of the Caribbean Development Bank, IMF, World Bank, and the British Government – the latter of which “is now on board”.
The Bill for the Act was not supported by the Leader of the Opposition in the House of Assembly, Ms. Palmavon Webster who, among other things, argued about its implication for taxpayers. A small group of protesters, with a similar view, took up a position outside the House as the legislation was debated.
Among other provisions, the Act commits the Government “to make payments to the Social Security Board and Depositor Protection Trusts in support of the resolution of the National Bank of Anguilla Ltd and the Caribbean Commercial Bank (Anguilla) Ltd.”
Schedule 1, (Section 2) of the Act provides the following payment terms for the Social Security Board: “The Government of Anguilla shall pay the Social Security Board the principal sum of EC$214 million; the Government of Anguilla shall pay interest on the reducing balance of the principal at the rate of 3% annually; the payment term is 25 years from 30th June 2016; payments shall be made in quarterly instalments. There is a five-year grace period on payments in respect of the principal sum with the first payment in respect of the principal sum to be made on 30th June 2021. The first payment in respect of the interest shall be made on 30th June 2016.
Responding to critics, Mr. Banks, the Chief Minister and Minister of Finance, denied that the Government was borrowing money from the Social Security Board to assist in financing the resolution of the banking sector. He indicated that the EC$214 million was the Board’s accumulative deposit at the two banks to which the Board does not have access, and which was therefore being protected by the Government.
The “Depositor Protection Trusts”, referred to by the Act in the Interpretation, has been defined as “the two Depositor Protection Trusts to be established and executed to protect as beneficiaries, the large depositors at the National Bank of Anguilla Limited and the Caribbean Commercial Bank (Anguilla) Ltd holding deposits in excess of EC$4 million”.
Schedule 2 (Section 2) of the Act sets out the “Payment terms for Depositor Protection Trusts” as follows:
“The Government of Anguilla shall pay the Depositor Protection Trusts the aggregate principal sum of EC$52 million. Out of the aggregate principal sum each Depositor Protection Trust is to be paid the proportionate amount to its obligations to the large depositors of NBA and CCB as beneficiaries.
“The Government of Anguilla shall pay interest on the reducing balance of the principal at the rate of 2% annually. The payment term is 10 years from 30th June 2016. Payments shall be made in quarterly instalments. The first payment is to be made on 30th June 2016”.
Apart from the above provisions of the Act, the House of Assembly was told by the Government’s side that there were a total of 22,000 deposits in NBA and CCB owned by ordinary depositors. The Government’s banking resolution and intervention would also protect those deposits.
Earlier, in the House of Assembly, another piece of legislation relating to addressing the banking situation was given its first reading. It was the Eastern Caribbean Asset Management Corporation (Amendment) Bill 2016. The principal Act establishes a holding company for delinquent loans and is aimed at giving defaulters an opportunity to eventually settle their accounts as may be necessary or appropriate.
