The Antigua and Barbuda government says the operations of the troubled Antigua Barbuda Investment (ABI) Bank “would cease immediately” after announcing that the financial institution is being taken over by the Eastern Caribbean Amalgamated Bank (ECAB).
Acting Prime Minister Steadroy “Cutie” Benjamin, said while the majority of the bank would go to ECAB the remaining portion goes into receivership.
The Eastern Caribbean Amalgamated Bank Ltd was established following the collapse of the Allen Stanford group of companies. The ECCB intervened after hundreds of worried depositors started withdrawing funds from the then Stanford-owned Bank of Antigua. It then facilitated a move for the Antigua & Barbuda government and several indigenous banks from the sub-region to take joint ownership of the troubled bank’s assets.
In a statement late Friday night, Benjamin confirmed that the two banks sealed a deal that would see the transfer of most of ABI’s operations to ECAB and that “the operations of the ABI Bank Ltd would cease with immediate effect”.
The statement was issued hours after Eastern Caribbean Central Bank (ECCB), government and senior ABI management met with staff to explain the latest turn of events.
“The government and the technical advisors from the Central Bank and IMF (International Monetary Fund) and of course with the cooperation of ECAB staff have moved the deposits and we have moved to secure their business and we have placed it in a very strong bank which will continue to provide the excellent service they are accustomed to and their monies are totally safe –fully guaranteed by us and the Central Bank,” Lennox Weston, Parliamentary Secretary in the Ministry of Finance, told the Caribbean Media Corporation (CMC).
Weston explained that ECAB will take over an estimated 95 per cent of ABI’s liabilities and assets.
“So for 95 per cent of the accounts, the only difference they will see is that where ABIB was, there’ll be ECAB and, of course, they will be in a bank that is much more secure with adequate capital and cash flow,” Weston said.
In July 2011, the ECCB assumed control of the troubled financial institution and has supervised the bank’s operations with a view to saving it from collapse.
Weston said that under the new arrangement, customers would see minimal disruptions in service and customers should be able to conduct their usual banking transactions when the bank opens its doors under the ECAB banner on Monday.
“Long story short there should be a smooth, continuous flow. By and large, what you’re having now is just a new, better bank,” Weston added.
According to the release deposits held at the ABI Bank, up to EC$500,000 (One EC dollar =US$0.37 cents) per person, have been transferred to the ECAB.
“Account holders will be able to conduct their normal banking business at the offices of the former ABI Bank Ltd from Monday, 30 November 2015. To meet the objective of full protection of the depositors, agreed to by the ECCB’s Monetary Council, the portion of a person’s deposits in excess of $500,000 have been transferred to a Depositor Protection Trust (DPT),” the government statement stated.
The DPT, the receiver, will manage these deposits and over time will make pay-outs on a semi-annual basis thereby allowing the depositors to recover their funds with interest.
Meanwhile, ABI staff members have been told that they will be terminated, paid severance and rehired by ECAB on a month to month basis for up to three months. At that time, ECAB will decide on the staff it would retain.
But one staffer, speaking on condition of anonymity, told CMC that while aspects of their termination was discussed during Friday’s meeting, many are still unclear as to how the bank will operate when it still opens on Monday.
According to Weston, staff members are to be paid severance and full benefits within four weeks. A loan from the Barbados-based Caribbean Development Bank (CDB) has been negotiated to facilitate government meeting this major pay-out.
The development comes days after Prime Minster Gaston Browne, who is also finance minister, sought to allay the fears of staff and customers by assuring them that the government was close to a resolution that would save the troubled bank.