ECCB defends action
February 26, 2010
ECCB defends action

Officials at the Eastern Caribbean Central Bank (ECCB) have responded to claims that it acted unjustly in “seizing” the Bank of Antigua last year.{{more}}

A group of disgruntled Stanford investors have filed a class action lawsuit in a United States District Court in Dallas, Texas, against the ECCB and other regional banks, including the Antigua Commercial Bank, the St Kitts-Nevis-Anguilla National Bank, the National Commercial Bank of St Vincent and the Grenadines and the National Bank of Dominica.

The group claims that the ECCB’s intervention was unlawful and the group is seeking compensation for the value of the Bank of Antigua when it was seized a year ago.

However, in a statement issued by the ECCB dated February 18, the region’s monetary governing body outlined facts surrounding their decision.

According to the document, the Bank of Antigua, a commercial bank, is licensed under the Banking laws governing the sector in Antigua and Barbuda and is, therefore, regulated by the ECCB.

The release said The Bank of Antigua “suffered a classic bank run” in the week beginning February 16, 2009, which was precipitated by the publication of negative statements regarding lone shareholder, Allen Stanford.

This run, according to the statement, threatened the capacity of the Bank of Antigua to “remain a viable entity and in the process put at risk the interest of depositors and creditors of the bank.”

The ECCB also contends that the possible failure of the Bank of Antigua had the capacity to destabilize the banking and financial system in that country, and by extension the rest of the Eastern Caribbean Currency Union (ECCU).

In order to avert any possible financial crises, the ECCB, on the direction of the Monetary Council and in accordance with its Emergency Powers, assumed control on February 20, 2009, and has been in constant contact with the United States Securities and Exchange Commission, and Ralph Janvey, the US receiver of the Stanford Estate.

The statement notes that neither party has challenged the legality of the Central Bank’s assumption of control of the Bank of Antigua.

A management company, the Eastern Caribbean Amalgamated Financial Company Ltd, which comprises representation from the banks included in the class action suit, has been appointed to manage the Bank on behalf of the Central Bank.

The ECCB is currently engaged in carrying out the legal and financial arrangements to bring a satisfactory closure to the matter.