ECAIC now runs Bank of Antigua

Jamila Soso-Vincent27.FEB.09

Following mass panic withdrawals by depositors of the Bank of Antigua (BOA), induced by civil fraud charges brought against Texan billionaire Sir Robert Allen Stanford, the Eastern Caribbean Central Bank (ECCB), in an emergency move, has formed a new entity, the Eastern Caribbean Amalgamated Investment Company Ltd (ECAIC), to carry on operations at the bank – effective since Monday, February 23rd, 2009.{{more}}

The ECAIC is the joint venture of indigenous banks within the Eastern Caribbean Central Union (ECCU), together with participation from the Government of Antigua and Barbuda.

The Executive Board of the BOA, which was part of the Stanford Financial Group, requested the intervention, and on the weekend of February 21 to 22, a consortium was held at the ECCB Headquarters in St. Kitts. Present were representatives from the ECCB, the Government of Antigua & Barbuda and the Government of St. Vincent & the Grenadines. Also present were representatives from five indigenous banks – Antigua Commercial Bank, St. Kitts-Nevis-Anguilla National Bank, Eastern Caribbean Financial Holdings Company, National Commercial Bank of St. Vincent and the Grenadines and the National Bank of Dominica.

As a result of this consortium, the following “critical elements” were established: an oversight committee chaired by Governor of the ECCB, which will monitor the operations of returning the BOA to full normality; the creation of the ECAIC to continue with bank operations; the change of name of the BOA to the Eastern Caribbean Amalgamated Bank (ECAB); and an evaluation of the BOA by the auditing firm PriceWaterhouse Coopers.

Additionally, the shares in the new undertaking (ECAB) have been divided evenly among the participating banks, with each receiving 15 per cent, and the Government of Antigua and Barbuda assigned 25 per cent of the remaining shares. According to Sir Dwight Venner, Governor of the ECCB, these shares will be divested to citizens of the ECCU “overtime” through placement on the Eastern Caribbean Securities Exchange.

At a press conference held on Monday, February 23, in Antigua, Sir Dwight acknowledged that the current climate of financial hardship being experienced regionally and internationally, coupled with an impending election in Antigua & Barbuda, had created “… a very unstable and volatile environment… for conducting such a delicate exercise as we are now embarked upon.” Venner pressed upon the customers of the BOA to “remain calm” in order to facilitate the bank’s return to its normal state.

Prime Minister Gonsalves, in remarks delivered in Parliament on Tuesday, February 24th, stated: “The ECCB and the indigenous banks have fashioned an appropriate regional response… it provides a strong buttress to our banking and financial system; it engenders confidence to the depositors and investors… Moreover, it offers a possible template for a further nexus or integration of the indigenous banks. It marks a coming of age of our sub-region in our banking and financial system.” Gonsalves, who is a member of the Monetary Council of the ECCB and Chairman of the Joint Task Force of the OECS-ECCB (established to address the socio-economic fallout to our sub-region from the international financial crisis), added: “I am overjoyed to be at the centre of this evolving and altered order in commercial banking… We must move forward in unity at this time of great challenge and opportunity.”

The ECCB and the other concerned parties are being lauded for their speedy response to this potentially catastrophic situation. Antigua and Barbuda Minister of Finance and the Economy Dr Errol Cort expressed heartfelt gratitude to the ECCB, Prime Minister Dr Ralph Gonsalves and other members of the Monetary Council, and the contributing indigenous banks (amongst others) for their invaluable input in alleviating the crisis. “We were able to successfully avert a disaster and save the deposits and interests of the customers… This new entity sets the stage for the creation of a strong, indigenous, OECS bank,” Cort declared.

In November 1981, the Bank of Antigua opened its doors for business and was acquired by the Stanford Financial Group in December 1990. With three locations across Antigua, the BOA is separate from the Stanford International Bank (SIB), which operated as an offshore financial entity.

Earlier last week, Sir Robert Allen Stanford was served with legal papers by U.S federal authorities relating to alleged fraud. Although the U.S Securities and Exchange Commission (SEC) is not accusing Stanford of operating the fraudulent scheme, they claim that he used his offshore bank, SIB, to lure investors into a US$8 billion ‘Ponzi’ scam.

In the late 1990’s, the Stanford Financial group attracted unfavourable attention from federal authorities, but in 2001 it was removed from the financial watch list. In 2006, a SEC inquiry was opened following a routine financial examination of the company. According to a New York Times article dated February 17, 2009, Stephen J. Korotash, SEC Associate Regional Director of Enforcement, claims that the SEC “stood down” on that investigation at the request of another unnamed federal agency. However, the inquiry was resumed in December 2008.