TURKS AND CAICOS – As most people will now know, the Financial Services Commission (FSC) was yesterday granted an Order by the Supreme Court of the Turks and Caicos Islands, for the appointment of a provisional liquidator for the Turks and Caicos Islands Bank, an independent commercial enterprise. In effect this means that the bank will not be open for business.
The FSC have informed me that all accounts will have been frozen, depositors will not have access to their funds and, very regrettably, may lose some of their money. The Court has appointed representatives of Deloitte & Touche as provisional liquidators as a first step in the process of liquidation.
The FSC have told me that details will be available very quickly explaining what steps will be taken, what staff should do, and to indicate how long it will take before depositors can expect to receive some of their money.
A commercial failure of this kind is an extremely serious matter. Not only will it be a blow for the staff of the bank, but I am concerned about the impact on the local community, especially those whose savings are at risk and whose access to banking services have been disrupted. I appeal to other licensed banks to deal as sympathetically as they can with those who are adversely affected.
I also appeal to all employers to look sympathetically at what they can do to help any of their employees who might be affected. As a matter of priority, the TCI Government is looking at what help might be made available to government employees who are reliant on the bank. I have asked the Ministry of Finance to bring forward to next week the payment of salaries and wages to those individuals and to exclude their April pay from the recently announced 10% cut.
While we now wait to see what timetable the provisional liquidators and the FSC put in place to deal with this situation, the Government will prioritise an already important policy objective: to put in place a measure of protection for individual depositors with banks in the TCI. Planning for the introduction of a Depositor Protection scheme -designed to make early payment of money to account holders of a failed bank licensed in the TCI – had begun. But given the very difficult situation we now face, I have concluded that we must press ahead for the urgent establishment of such a scheme. Schemes of this kind, which provide depositor protection for all banks’ individual resident account holders up to defined limits, are common practice internationally. They are funded by the banks licensed to operate within those countries which have established these schemes. They are not funded out of the public purse.
Given the gravity of this matter I have asked the FSC to engage in discussions on depositor protection with the banks licensed in this country, at the beginning of next week. I am also today writing to the banks and their regional head offices to explain why the Government is taking these steps and to ask that they cooperate with the FSC. I believe that this scheme should be applied to the current situation in order to give some measure of comfort to those individuals in our community who will be personally affected by the failure of TCI Bank and I am asking the banks to work with us toward this goal.
I will take early opportunities to discuss with members of the Advisory Council and the Consultative Forum the swift introduction of a Depositor Protection Ordinance which will provide the legislative mechanism to establish a scheme of this kind in the TCI. I will also ask the Chairman and Managing Director of the FSC to attend meetings with the Council and Forum to report on the situation and the outcome of negotiations with the banks.
