‘No corruption found by Independent agencies’

The price of EC$42 million, which has been arrived at for the sale of 51 per cent of shares in the National Commercial Bank (NCB) to East Caribbean Financial Holding Company Ltd (ECFH) of St. Lucia, was assessed by at least three independent agencies, and represents the difference between the NCB’s assets and its liabilities.{{more}}

This was stated by CEO of the NCB Andre Iton at a press conference held by the Bank at its Bedford Street Headquarters on Tuesday. Iton said the difference between the assets and the liabilities is the net book value, which is reflected in the shareholders’ equity and retained earnings.

“A Bank is an institution where the liabilities are in the main depositors’ funds and any borrowed monies at the bank; the assets are the uses that those liabilities are put to,” said Iton.

He also said that the independent assessments done on the bank agreed with the stated book value, and that none of the independent agencies found that there had been corruption.

“The due diligence of the purchasers satisfied them that that price, that net book value, was consistent with the assets that they are acquiring, and the liabilities that they would have to match against those assets,” said Iton, noting that the Bank has been subjected to three or four other independent assessments by various agencies during the past six months, and the deviation is not signficant among any of them.

“Contrary to all the public noises, in all cases, none of the issues of corruption or any of the uttered demeaning stuff that has been forthcoming have been found by a number of agencies that have come through here and have done their independent checks,” said Iton.

Iton said the notion that because NCB has some buildings and lands that is worth a lot more, is a failure on critics’ part to understand that there are liabilities in the picture.

The CEO disclosed that the NCB has $520 million in deposits which are owed to people that are matched against its loans.

“You can’t say that you have that, because those are matched against what you owe people….Your assets are matched against your liabilities.

“It’s just the same like you. If you have a house and you have a mortgage, what it’s worth is the difference between the value of the house and the mortgage. You’re not valued $500,000 if you owe the bank $400, 000 on the house. You’re valued $100,000….You can’t go out and sell it for $500,000 and get $500,000, because first you have to pay off the $400,000,” said Iton, nothing that the bank follows the same principle.

Iton also explained the situation in relation to government real estate assets such as the Mt. Wynne Estate, which were recently transferred to the Bank.

“In this case, the Mt.Wynne properties which are non-cash and which banks don’t want anyway are going to be reversed for cash. To answer your question, the Mt. Wynne properties will revert to the previous beneficial owner, who was the Government, and cash will be paid out of proceeds that the Government will be getting to replenish the banks liquidity.”

“No bank wants land; land doesn’t generate income. Land sits there….Land is of little value to banks. There is no bank who is going to gladly sit on undeveloped land and call it an asset,” said Iton.

He said it doesn’t matter which part of the world a bank is being valued, it will always be done on the basis of its net book value.

Iton said St.Vincent and the Grenadines is the last in the OECS region to be moving in the direction of privatizing the state owned bank. He stressed that the others at a far earlier stage recognized that the role of a national bank in promoting the financial development of the domestic economy was going to be significantly enhanced, if it was focussed on a private sector ownership structure as opposed to a public sector ownership structure.

“When you listen to the debate in this environment, you think that we are doing something that is earth shattering,” said Iton.