(MENAFN- Caribbean News Global) CASTRIES, St Lucia – The Eastern Caribbean Central Bank, ( ECCB ) has advised that“pursuant to its powers under Part IX, Section 114 of the banking Act, 2015 of Saint Lucia (No 3 of 2015),” and“taken in consultation and collaboration with the board of directors and management of financial investment and Consultancy Services Limited (FICS),” has appointed Niguel Streete as the official administrator for FICS, effective Monday, 6 January 2025.
“ In his capacity as official administrator, Streete has now assumed responsibility for the management and operations of FICS,” the ECCB release said.“FICS remains open to serve its customers and the wider public. It continues to hold a licence to carry on banking business in Saint Lucia, and remains under the regulatory oversight of the ECCB. ”
In this time capsule, it is important to carefully understand what is at stake, as stipulated in Part IX, Section 114 of the Banking Act, 2015 of Saint Lucia (No 3 of 2015).
Section 114. Grounds for appointing an official administrator: “ (1) The Central Bank may appoint an official administrator for a licensed financial institution or licensed financial holding company where:
(a) the Central Bank determines that the licensed financial institution or licensed financial holding company has: (i) violated any provision of this Act or Regulations made under this Act or prudential standards issued by the Central Bank, or (ii) engaged in any unsafe and unsound practices, in such a manner as to weaken the licensed financial institution's or licensed financial holding company's condition, threaten depositors' interests, or dissipate the licensed financial institution's or licensed financial holding company's assets;
(b) the licensed financial institution's or licensed financial holding company regulatory capital level falls below the minimum regulatory capital required pursuant to section 44 and related prudential standards issued by the Central Bank;
(c) the Central Bank has reasonable cause to believe that the licensed financial institution or the licensed financial holding company or its directors, officers, or significant shareholders has engaged or is engaging in illegal activities in a manner as to jeopardize depositors' interests;
(d) the Central Bank determines that the licensed financial institution or licensed financial holding company is in an unsafe or unsound condition to transact business and the licensed financial institution or licensed financial holding company or its directors or officers are unable to promptly improve such condition;
(e) the licensed financial institution or the licensed financial holding company fails in any manner to cooperate with the Central Bank or its examiners to enable the Central Bank to perform its supervisory responsibilities, including through concealment or failure to submit for inspection any of the licensed financial institution's or licensed financial holding company's books, papers or records;
(f) the licensed financial institution or licensed financial holding company fails in any manner to cooperate with its external auditors;
“ (g) the licensed financial institution or licensed financial holding company or its directors, officers, employees, or significant shareholders wilfully violate or fail to comply with an order or direction of the Central Bank under sections 75 to 87; or (h) the licensed financial institution or licensed financial holding company, by resolution of its directors or shareholders, requests the appointment of an official administrator. ”
Section 118. Period of appointment:“ (1) An official administrator may be appointed for a period not exceeding 12 months. (2) An official administrator may be appointed for a further period not exceeding 12 months if it appears to the Central Bank that additional time is required to ensure an orderly restructuring of the licensed financial institution or licensed financial holding company under this Act. ”
Section: 124. General powers of the official administrator: “ (1) Upon the appointment of an official administrator, all powers, functions and responsibilities of the licensed financial institution's or licensed financial holding company's shareholders, directors, and officers shall vest in the official administrator, except where the official administrator requests the shareholders or directors or officers to carry out any activity provided under this Act.
(2) The official administrator shall have full and exclusive powers to manage and operate the licensed financial institution or licensed financial holding company, including taking any action:
(a) necessary or appropriate to carry on the business of the licensed financial institution or licensed financial holding company in accordance with this Act, Regulations made under section 183, Orders or prudential standards issued by the Central Bank; (b) to preserve and safeguard its assets and property; or (c) to implement a plan of action with respect to the licensed financial institution or licensed financial holding company approved by the Central Bank.
(3) The official administrator may, with the approval of the Central Bank, and notwithstanding any other law or the constituent documents of the licensed financial institution or licensed financial holding company:
(a) remove any or all directors and officers, and appoint their replacements subject to the criteria in section 97; (b) issue shares, or rights to acquire shares, in the licensed financial institution or licensed financial holding company; (c) cancel shares, or rights to acquire shares, in the licensed financial institution or licensed financial holding company; (d) reduce the share capital by cancelling any paid-up share capital that is not represented by available assets; or (e) sell shares, or rights to acquire shares, in the licensed financial institution or licensed financial holding company.
“ (4) The official administrator may employ, at the expense of the licensed financial institution or licensed financial holding company in official administration: (a) legal counsel; (b) accountants; (c) valuators; (d) appraisers; (e) and other independent professionals or consultants, to assist the official administrator, on terms the Central Bank shall approve. ”
Section 126. Suspension of dividends:“ The official administrator shall immediately suspend the payment of capital distributions in general and payment of any kind to directors, officers, and significant shareholders however base compensation may be paid to directors or officers for services rendered in their capacity as directors or officers of the licensed financial institution or licensed financial holding company. ”
Section:127. Moratorium and effect of official administration on proceedings, reads in part: “ (1) The Central Bank may impose a moratorium suspending some or all payments by a licensed financial institution or licensed financial holding company in official administration, except payments to central clearing counter-parties and to payment, settlement and clearing systems.
(2) On and during the appointment of an official administrator, no creditor, shareholder, depositor or any other person shall have any remedy against the licensed financial institution or licensed financial holding company in respect of any claim.
(3) Without prejudice to the generality of subsection (2), no creditor, shareholder, depositor or any other person shall :
“ (a) commence or continue any action, execution or other proceedings; or (b) seek to enforce in any way any judgment or order obtained against the licensed financial institution or licensed financial holding company or its successor or the transferee of the whole or any part of any property, assets or undertaking of the licensed financial institution or licensed financial holding company for the recovery of any claim or in respect of any other liability, until the termination of official administration in relation to the licensed financial institution or licensed financial holding company or without the prior leave of the court, unless the court directs otherwise, [4-12]. ”
According to the FICS website January 8, 2025:
“ FICS was incorporated in November 1991 and opened its doors to the public on February 24, 1992. FICS is a diversified finance company that emphasizes the provision of credit and financial services to individuals and corporations. The company is a non-bank financial entity that is legally authorized to accept deposits from the public.
“ FICS's operations are governed by the Banking Act of 2015, the Regulations and Guidelines of the Eastern Caribbean Central Bank (ECCB), as well as the ECCB Agreement 1983 and the Companies Act 1996. FICS was established in 1992 with initial equity of $140,000. To date, FICS has grown considerably and now has an asset base of approximately $210 million. ”
In furtherance of the significance of the ECCB action and consequent from the press release, it is worth noting, Section 129. Taking control of the licensed financial institution: “ (1) Immediately upon appointment, the official administrator shall secure the properties, offices, assets, books and records of the licensed financial institution or licensed financial holding company, and may take all necessary or appropriate steps aimed at such purpose, including without limitation:
(a) cancelling authorisations of persons to engage the financial responsibility of the licensed financial institution or licensed financial holding company and issuing new authorisations, as appropriate, and notifying third parties;
“ (b) informing correspondent financial institutions, registrars and transfer agents of securities, and external asset managers of the licensed financial institution's or licensed financial holding company's assets that persons who previously had authorization to give instructions on behalf of the licensed financial institution or licensed financial holding company with respect to dealing in the licensed financial institution's or licensed financial holding company's assets or assets held in trust by the licensed financial institution or licensed financial holding company are no longer so authorised and that only the official administrator, and persons authorised by the official administrator have such authority. [2 – 5.]. ”
Section 130. Inventory and plan of action to resolve the licensed financial institution or licensed financial holding company: “ (1) Not later than 30 days after the appointment, the official administrator shall prepare and deliver to the Central Bank an inventory of the licensed financial institution's or licensed financial holding company's assets and liabilities.
(2) The official administrator in his report shall classify the assets in accordance with applicable asset classification criteria.
(3) Not later than 90 days after the appointment, the official administrator shall prepare and deliver to the Central Bank a report on the financial condition and future prospects of the licensed financial institution or licensed financial holding company.
(4) The official administrator shall include in the report an assessment of the amount of assets likely to be realized in a liquidation of the licensed financial institution or licensed financial holding company.
(5) In the report referred to under subsection (3), the official administrator shall propose a plan of action which, as appropriate, may recommend:
(a) returning the licensed financial institution or licensed financial holding company to compliance with the provisions of this Act by carrying out a plan of corrective actions that may include a capital increase; (b) compulsory liquidation of the licensed financial institution or licensed financial holding company if there is no reasonable prospect for the return of the licensed financial institution or licensed financial holding company to financial soundness through reorganization or otherwise; or (c) any other course of action designed to resolve the licensed financial institution or licensed financial holding company in a manner that minimizes disruption to depositors and preserves the stability of the financial system.
(6) The official administrator shall promptly provide any additional report or information requested by the Central Bank.
(7) The Central Bank may: (a) approve the report or additional report mentioned in subsection (3) or (6) without modification; (b) approve the report or additional report mentioned in subsection (3) or (6) subject to such conditions as it considers necessary; or (c) refuse to approve the report.
(8) On the basis of the report and with the approval of the Central Bank, the official administrator shall implement the plan of action.
“ (9) In carrying out any resolution pursuant to this Part, the Central Bank shall take into account the order of priorities of claims that would be applicable in liquidation, as set out in section 153 and ensure that similarly situated creditors are treated in a similar manner. [10-12]. ”
Also note sections: 131. Capital increase by existing shareholders; 132. Recapitalization by new shareholders; 133. Mergers, sales and other restructurings; and 134. Mandatory restructuring of liabilities.
Section 135. Misconduct by shareholders, directors, officers or others:” If the official administrator has reasonable cause to believe that significant shareholders, directors, officers, attorneys, accountants or other professionals have engaged or are engaging in illegal activities punishable by imprisonment or in fraudulent activities, it shall immediately notify: (a) the Central Bank and shall pursue civil actions seeking damages and restitution; and (b) the authorities responsible for investigating and prosecuting the activities. “
Section 136. Expenses of the official administration:” (1) The official administrator shall receive a remuneration determined by the Central Bank. (2) All costs and expenses incurred on account of the official administration shall be borne by and charged to the licensed financial institution or licensed financial holding company subject to any proceedings. “
Section 137. Termination of official administration: “ (2) An official administration may be terminated prior to the expiry of the term identified in subsection (1) if the Central Bank determines that:
“ (a) official administration is no longer necessary because the grounds for appointment of the official administrator have been remedied; or (b) the licensed financial institution or licensed financial holding company cannot be rehabilitated and the Central Bank issues a decision to revoke the licensed financial institution's or licensed financial holding company's license under section 14 and to commence liquidation proceedings under Part X. [3 and 4], and (5) Within 30 days of the termination of the appointment, the official administrator shall prepare and submit to the Central Bank a final report and accounting of the official administration. ”
The Banking Act 2015 was drafted within the context of developing a single banking space in the Eastern Caribbean Currency Union, (ECCU). The ECCB is the licensing authority for the banking sector and a single licence authorises a financial institution to operate in the space on a branch basis subject to the approval of the location of new business premises.
Banking Act, 2015 – 2022-03-17-02-37-19-BankingBill2015
ECCB – The Journey says:“ The ECCB has been diligently fulfilling its mission of“advancing the good of the people of the Currency Union” by maintaining monetary and financial stability and promoting growth and development. The ECCB is the Monetary Authority for a population of more than 600,000 people, people spanning six sovereign states: Antigua and Barbuda, the Commonwealth of Dominica, Grenada, Saint Christopher (St Kitts) and Nevis, Saint Lucia, and Saint Vincent and the Grenadines, and two overseas territories of the United Kingdom: Anguilla and Montserrat. ”
CNG Insights
Contingent on the specifics to unfold, the appointment of official administration is another dimension across closely linked markets. The significance has meaning currently not written.
GlobalCaribbean
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