Another Bank Withdraws From Turks And Caicos

By Editorial 23 August, 2012

The impact of the global financial crisis, and the UK government's decision in August 2009 to assume control over the Turks and Caicos Islands' affairs, have again been given as the reasons behind the closure of a second banking institution in the Turks and Caicos Islands, the International Banking Group (IBG).

In announcing its decision, the main stakeholder in IBG, Cayman National Corporation said that it had become an investor in IBG some years ago, "at a time when economic conditions were more favourable". CNC said that while it had predicted that the new bank, which opened its doors in 2010, would be loss-making for the initial period of trading, "various unique events conspired against the success of the new bank including the world-wide economic crisis, the impact of the failure of TCI Bank and the uncertainty that the constitutional crisis in the Turks & Caicos Islands generated".

"As a result, and despite measures to reduce costs, IBG has found it difficult to develop new business and ongoing losses have far exceeded original expectations. In the circumstances the directors of IBG believe that the responsible action is to undertake an orderly wind-down of the retail banking operation in the Turks and Caicos Islands and to ensure all the depositors of IBG are paid out in full. This process will now commence and customers of the bank in the Turks & Caicos Islands are being advised accordingly. We would also mention that for practical reasons it is preferable for IBG to continue to provide merchant service and credit card facilities."

CNC emphasized that the closure of the bank would not affect the company's operations in the Cayman Islands or any other jurisdiction in which the corporation operates.

Earlier, on April 9, 2010, the island's first indigenous bank, TCI Bank, closed its doors and was subsequently liquidated. Significant withdrawals of funds were said to have contributed to the bank's demise, which the islands' Financial Services Commission (FSC) said had left the bank unable to operate normally and meet its obligations on a timely basis.

Ric Todd, the Governor of the Turks and Caicos Islands played down the impact of the closure of IBG's operations, stating: "This action by IBG does not mean that the commercial banking sector in TCI is in trouble. The International Banking Group is a relatively small operator which holds few deposits and has a low number of loans on its books. The closure of IBG, while regrettable, is a commercial decision by the bank. It is not a reflection of low confidence in the TCI economy. The economy remains strong and is growing, as demonstrated by the economic figures (GDP growth of 4.1% in 2011) released by the government on August 1, 2012."

The government confirmed that the FSC is in discussion with the International Banking Group to ensure that all depositors' funds will be protected and returned to them as soon as possible; that the bank will seek to sell on all loans on their books to another commercial loan provider; and that IBG will contact their local shareholders directly to discuss their position.

Tags: Expatriates | Investment | Banking | International Financial Centres (IFC) | Turks And Caicos Islands | Offshore | Offshore Banking |


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