fp Turks and Caicos

The Supreme Court today (Oct. 29) ordered TCI Bank Ltd. into full liquidation, meaning thousands of customers will get only pennies on the dollar for money they had in the Turks and Caicos Islands' only indigenous bank.

The Financial Services Commission closed the bank in April and called in provisional liquidators after a number of large withdrawals were made from the bank that was already overburdened with non-performing loans. There was a proposal before the court by two Eastern Caribbean banks to take over TCI Bank that would have given all deposit accounts access to up to $50,000, saving all money for 97 percent of TCI Bank’s depositors.

That offer apparently was not enough to stop the court from ordering full liquidation. Click HERE for an explanation of the liquidation process.

Government CEO Mark Capes, who is acting governor while His Excellency the Gov. Gordon Wetherell is in the U.K., issued the following statement:

The decision to finally close TCI Bank will have been a difficult one for the Court. The Court has expressed throughout how conscious it is of the hardship that would be caused if the bank had to be put into full liquidation. Commercial matters of this kind are always very complex. The Court, in its note of the judgement, will explain fully the reasons why it has had to come to this unfortunate conclusion.

The closure of TCI Bank will be a significant blow for many in the community. Not only local shareholders who had placed their trust in the Bank’s board and risked their money on the bank’s future, but particularly for the depositors who are now likely to lose some of their savings.

It is because a commercial failure of this kind can have a serious impact on ordinary depositors, that the Governor announced earlier this year that the Government would progress steps to introduce a depositor protection scheme in the TCI. Since then we have held constructive discussions with the TCI’s banking community on depositor protection and improving the regulatory framework for banks in the territory. These will continue with the banks with a view to reaching a conclusion that meets the requirements of investors and depositors and enhances the reputation of, and confidence in, the TCI.

Discussions have included progressing plans for an independent assessment of options for establishing the most appropriate safe‐guards for depositors and ensuring that the supervisory framework for banks in the TCI is fit for purpose and meets international standards. Accordingly, the Government has been in negotiations with international organisations to ask for support in carrying out these assessments. Although negotiations are still ongoing, I am pleased to confirm that the International Monetary Fund has agreed to provide technical assistance early next year.

In addition, the Government has asked the Financial Services Commission to conduct a review of the FSC’s oversight of TCI Bank and the circumstances that lead to the application for a Court Order to place the bank in to Provisional Liquidation. The review, which is being conducted at Board level, is nearing completion and will be submitted to the Governor shortly.