You are here
Nunez-Tesheira tells depositors: Your funds are safe
January 31, 2009
Finance Minister Karen Nunez-Tesheira and Central Bank Governor Ewart Williams yesterday assured depositors and policyholders of insurance powerhouse, Colonial Life Insurance Co Ltd (Clico), British American Insurance Ltd and Clico Insurance Bank (CIB)—all subsidiaries of the Lawrence Duprey-led CL Financial Group—that their investments in the companies were safe.
“Your funds are safe,” said Nunez-Tesheira at a press conference yesterday in the Central Bank’s 16th floor conference room. Williams yesterday announced that the Government is to take majority ownership of banking giant Republic Bank Ltd. It will take over Methanol Holdings Ltd and Clico Investment Bank (CIB), both subsidiaries of the CL Financial Group and provide funding for Clico, in a bailout of the CL Financial Group by the Government and the Central Bank.
Nunez-Tesheira said, “This is a time when we must show our mettle,” adding that there was a “Government commitment to ensure that depositors’ assets will not be at risk. “We are going to weather this storm and the only way to do this is to take action swiftly and decisively.” Williams echoed her statements, emphasising the tremendous strength of the country’s financial system.
He said that the local banking system is well regulated and well funded, with a capital adequacy ratio of 18 per cent, compared to the recommended minimum ratio of eight per cent. He said the level of non-performing loans among local banks is at two per cent and the banks have adequate protection against these non-performing loans.
Nunez-Tesheira and Williams said the Government and the Central Bank had acted to maintain confidence in Clico, which Williams said had for decades been a mainstay of the insurance industry in T&T and the Caribbean. Williams said failure of the company would have far-reaching consequences for the country and the region.
He said CL Financial controls more than $100 billion in assets in 28 companies in the region and the world, spanning several sectors, including banking, finance, real estate, marketing and distribution. He added that the four largest institutions in the CL Financial Group together manage $38 billion in assets and its subsidiary, British American Insurance, was one of the main insurance companies in the eastern Caribbean.
Neither would say how much the bailout would cost. Williams said there was an estimate of how much would be needed to prop up the companies, but said it would not be wise to release that figure as there was a lot of technical work still to be done and the figure might change. He said that a foreign consultant would arrive in T&T over the weekend to assess Clico’s value and the extent of the funding that was likely to be required.
Confirming a week of speculation about the financial health of Clico and its parent CL Financial, Williams said the Government would take control of CIB and another CL Financial subsidiary, Caribbean Money Market Brokers Limited (CMMB), and transfer their assets and liabilities to State-owned First Citizens (Bank). CIB’s banking license would be revoked and the bank would eventually be shut down.
Williams said the Government would provide whatever additional funding was required by Clico to ensure that the insurance company could meet all its obligations to policyholders and people whose pension plans and annuity policies were administered by the group.
In exchange, the Government would assume unspecified shareholding in the insurance giant, and would use this shareholding as a catalyst for the restructuring of Clico, its business and its management and governance structure. In a statement, the Central Bank said that once Clico had been stabilised, it would be made a public company and listed on the T&T Stock Exchange.
User comments posted on this website are the sole views and opinions of the comment writer and are not representative of Guardian Media Limited or its staff. Guardian Media Limited accepts no liability and will not be held accountable for user comments.
Please help us keep out site clean from inappropriate comments by using the flag option.
Guardian Media Limited reserves the right to remove, to edit or to censor any comments. Any content which is considered unsuitable, unlawful or offensive, includes personal details, advertises or promotes products, services or websites or repeats previous comments will be removed.