International Banking Group (IBG), the newest bank in the Turks and Caicos Islands (TCI), and a subsidiary of the Cayman Islands Cayman National Corporation, will cease retail operations, effective tomorrow Tuesday August 14th.

Chris Johnson, managing partner of Chris Johnson Associates, who is currently working extensively in the TCI said to iNews Cayman:

“An incredibly poor decision to open in the TCI in July 2010 after the downturn in the worldwide economy and the problems surrounding the TCI premier and his henchmen.

“By that time there were already five banks in Providenciales, including RBC, First Caribbean Bank and Scotia serving a population far less than that of Grand Cayman. Moreover, TCI Bank had just two months earlier gone into compulsory liquidation.

“IBG Bank could not have chosen a worse time to open its doors and clearly they could not have commissioned an independent feasibility study.”

A press release from the bank said the original business plan for IBG we predicted that the new bank, which opened its doors in July 2010, would be loss-making for the initial period of trading but various unique events have conspired against the success of the new bank.

These, the statement said, included 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 we believe that the responsible action is to undertake an orderly wind-down of the retail banking operation and to ensure all depositors are paid out in full. We would add that for practical reasons we will continue to provide merchant services and some credit card facilities. The process to wind-down the banking operations will now commence and customers of the bank are being advised accordingly,” the press release added.

On Monday the 19th of July 2010 International Banking Group opened its doors to the public. With 35 staff, 15,000 square feet, 6 tellers and ATM services it is ready to serve the public of the Turks & Caicos Islands.

IBG is a subsidiary of Cayman National Corporation, which is the bank’s majority owner. Cayman National Corporation is the largest indigenous financial services company based in the Cayman Islands, providing banking, trust and company management, fund administration, and wealth management to clients locally and around the world.

In a media statement, Governor Ric Todd said the closure of IBG’s banking operations in the TCI does not compare with the TCI Bank situation from 2010.

He said the Financial Services Commission is in discussion with the International Banking Group to ensure that all depositor’s 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.

Todd said: “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 GDP figures (GDP growth of 4.1% in 2011) released by the government on 1 August 2012.”

For more on this story go to:

http://suntci.com/ibg-bank-closing-down-p137-108.htm

Second story from Sun Turks & Caicos:

“New bank blames constitutional crisis in TCI for its closure”

Officials from International banking Group (IBG) said the “uncertainty that the constitutional crisis in the Turks & Caicos Islands generated” was one of the reasons why they were forced to close their bank in the Turks and Caicos Islands after a mere 25 months of operation.

IBG, which is the second bank in the Turks and Caicos Islands to collapse in as many years, announced that it was winding down its operations in this British Overseas Territory on Tuesday, August 14th, exactly three years to the day after the UK Government instructed the Governor to enforce an Order-in-Council suspending certain provisions of the TCI Constitution, including abolishing Cabinet and the automatic right to trial by jury and dissolving the House of Assembly and vacating the seats of all members.

IBG, which is majority-owned by Cayman National Corporation, the largest indigenous financial services company based in another British Overseas Territory, the Cayman Islands, said in a media statement Tuesday that in addition to the constitutional crisis, the world-wide economic crisis, and the impact of the failure of TCI Bank were among the other “various unique events” that “conspired against the success” of IBG.

“Despite measures to reduce costs, IBG has found it difficult to develop new business and ongoing losses have far exceeded original expectations,” the statement from the bank added. “In the circumstances we believe that the responsible action is to undertake an orderly wind-down of the retail banking operation and to ensure all depositors are paid out in full. We would add that for practical reasons we will continue to provide merchant services and some credit card facilities. The process to wind-down the banking operations will now commence and customers of the bank are being advised accordingly.”

Reacting to the bank’s closure, Governor of the Turks and Caicos Islands, Ric Todd, did not address the bank’s claim that the constitutional crisis in TCI contributed to its closure, but he said that the closure of IBG, while “regrettable….is not a reflection of low confidence in the TCI economy”.

He stated: “The economy remains strong and is growing, as demonstrated by the GDP figures (GDP growth of 4.1% in 2011) released by the government on 1 August 2012,” Todd said.

Governor Todd said this action by IBG does not mean that the commercial banking sector in TCI is in trouble, adding that IBG is a “relatively small operator which holds few deposits and has a low number of loans on its books”.

He added that the closure of IBG’s banking operations in the TCI does not compare with the collapse of the TCI Bank in 2010.
According to the Governor, the Turks and Caicos Islands Financial Services Commission is in discussion with IBG to ensure that all depositor’s 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.

On Friday April 9th, 2010, the TCI’s FSC closed TCI Bank after the bank suffered a number of significant withdrawals of funds which left it unable to operate normally and meet its obligations on a timely basis.

At that time the TCI Bank’s board of directors said that the manner in which the FSC undertook the closure and liquidation of the bank could have “tragic consequences for the financial sector and the local economy on a whole”.

The directors said that at the time the bank was placed into liquidation, representatives of the Bank and its major depositors were at an advanced stage of negotiations with an investor that would have significantly strengthened the Bank and allowed it to expand its operations.

Three months after TCI Bank collapsed, on Monday July 19th, 2010 International Banking Group opened its doors to the public, in a three-storey building with 35 staff, 15,000 square feet, 6 tellers and ATM services, and promising to offer, among other things, banking products with the highest level of customer service.
http://suntci.com/new-bank-blames-constitutional-crisis-in-tci-for-its-closure-p137-108.htm
At the official opening of the bank, the then Acting Governor Mark Capes said:

“We all know that these are difficult times…most organisations are looking to become leaner and more efficient in what they do but it’s the really smart ones who are positioning themselves for the economic recovery, which many forecasters predict is not far away.”

He added: “This [International Banking Group] is an excellent forward-looking organisation. It’s a world-class bank. This evening sends out a very clear and positive signal to the world: the TCI is open for business and we welcome investment. I have no doubt at all, given their record, that International Banking Group, IBG, will soon be an acronym as well known as IGA.”

Also at the opening, Stuart Dack, president and chief executive of Cayman National Corporation of International Banking Group said: “(This) marks the culmination of effort that spans many months. From obtaining our license in 2008, to designing our headquarters and seeing that come to completion in December 2009; from hand picking and training every member of staff, to ensuring that our technology is at the top of its game. This has been a long road, but one which puts us in good stead for great success going forward.

“We entered this market knowing that the best way for us to succeed was by providing the best service. This means understanding our market and understanding the needs of persons and businesses in the TCI specifically – providing for their banking needs and anticipating those needs.”

For more on this story go to:

http://suntci.com/new-bank-blames-constitutional-crisis-in-tci-for-its-closure-p137-108.htm