Changes announced at Bank of Antigua, following Stanford Probe

A conglomerate of local and regional institutions has taken control of the Sir Allen Stanford-owned Bank of Antigua (BOA), which has been renamed the Eastern Caribbean Amalgamated Bank.



Over the weekend, the sub-region’s regulators at the Eastern Caribbean Central Bank (ECCB) met and subsequently announced the formation of the new entity to carry forward BOA’s operations.



“The Monetary Council of the ECCB approved a plan of action in which leading indigenous banks, together with the government of Antigua & Barbuda have come together to establish a new entity which will take over the operations of the Bank of Antigua Ltd by Monday, 23 February 2009,” the communique said.



The statement said the move became necessary in light of a complaint filed by the United States Securities and Exchange Commission (SEC) last week against Sir Allen and the Stanford Financial Group.



The action by the SEC came in response to what it said was fraud of a “shocking magnitude” which has taken the form of a US$8 billion scheme in which Stanford officials allegedly misrepresented the safety and liquidity of uninsured certificates of deposits (CDs).



The development triggered a run on BOA by anxious depositors, many of whom have opted for immediate withdrawal of their funds.

The ECCB, in its statement, did not disclose specifics of the new deal or the extent of the current liquidity requirement.



However, it confirmed the involvement of the governments of Antigua & Barbuda and St Vincent & the Grenadines in the arrangement that also includes five regional banks: the Antigua Commercial Bank; the St Kitts-Nevis-Anguilla National Bank Ltd; the Eastern Caribbean Financial Holdings Company Ltd; the National Commercial Bank (SVG) Ltd and National Bank of Dominica Ltd.



When contacted, Finance Minister Errol Cort, who is also chairman of the Eastern Caribbean Currency Union, would not comment on the specifics of the arrangement but said the details would be announced at a press conference on Monday afternoon.



Vincentian Prime Minister Ralph Gonsalves, who, along with Cort, is said to be “leading the effort to put the arrangements together” also declined to discuss details of the new measures but said he remained concerned about the implications of the recent run on the BOA.



“It is a matter which relates to the monetary and financial stability of our sub region,” Gonsalves said late Sunday night.

He said he believed the actions taken by the Central Bank would serve to stabilise the situation.



“We have a lot of sensible people involved and a lot of people who are making sure that our sub region that is well-known for financial stability that it so remains,” he said.



In the meantime, the ECCB has sent in two teams of bank supervisors and has been meeting the liquidity requirements of the Bank in order to ensure that the depositors’ demands are met.



Prime Minister Baldwin Spencer is also due to meet with the estimated 700 Stanford employees here this week to discuss the situation.