Antigua and Barbuda: De-Risking In Jeopardy 2

Yet again another financial institution finds itself under the spotlight in Antigua & Barbuda.

This time it is the BOI Bank Corporation trading as BOI Bank.

BOI, which was formed in March 1994 and based in Antigua, is promoted as an international bank connected to the global financial services network of Grupo Financiero BOD.

According to the BOD's website, the group consists of a conglomerate of fifteen companies operating in five countries in Latin America in the banking, capital markets, insurance and health sectors.

It is chaired by Venezuelan Víctor Vargas Irausquín, who lives in the lives in the Dominican Republic and who is also believed to be the sole shareholder.

The Group is made up of: BOD Banco Universal (Venezuela), Allbank Corp (Panama), BOI Bank Corporation (Antigua and Barbuda), Banco del Orinoco NV (Curacao) and Bancamérica (Dominican Republic). In the capital market, BOD Securities Casa de Bolsa (Venezuela), Plus Capital Market (Panama), Plus Capital Market (Dominican Republic) and BOD Mutual Funds (Venezuela). In the insurance sector, Seguros La Occidental and in health services, Global Care, Salud Care and Planinsa, all Venezuelan companies. The group also includes Pymefactoring (Venezuela) and National Leasing (Panama).

However, leaving aside Antigua & Barbuda's long history of banking failures, the current reasons BOI in Antigua is attracting attention are because in 2018 customers complained they were unable to access their funds and, more recently, the regulatory investigations that led to the closure of two other banks in the B.O.D Group and regulatory intervention of Banco Occidental de Descuento in Venezuela

The Central Bank of Curacao and St. Maarten said its decision on 5 September 2019 to implement an "emergency measure" by suspending activities was due to deficiencies at the Bank, which Mr Vargas has claimed to appeal against.

BOD's board later dissolved Banco del Orinoco, though, its assets in Curacao have been frozen for investigation.

Following Curacao's decision, Panama's banking regulator intervened in Allbank Corp, which has its headquarters in Curacao. The Bank was closed down on 10 September 2019 by the Superintendence of Banks of Panama to safeguard the interests of customers.

It is said that the Bank has links to the French and Spanish monarchies. Luis Alfonso de Borbón Martínez Bordiú, who was one of its directors, is the great-grandson of Francisco Franco, the late Spanish dictator and is the cousin of King Philip VI of Spain. Mr Vargas Irausquin is the father-in-law of Mr Borbón.

Subsequently, Venezuela's banking regulator, the Superintendencia de Las Instituciones del Sector Bancario (SUDEBAN) has introduced a temporary administrative measure at the private bank Banco Occidental de Descuento (BOD), the country's fifth-largest bank by assets, which has 6 million clients. This will last for 4 months with a potential for extension.

The Bank will be permitted to operate but new board appointments, new investments and dividends are frozen.

So what has been the reaction of Antigua & Barbuda to this particular instance and manifestation of the collapse of the Venezuela economy, its finance sector and public order?

The Regulatory Commission for the Financial Services of Antigua and Barbuda issued the following public statement on 19 September 2019:

"The Financial Services Regulatory Commission (the "FSRC") hereby clarifies reports in certain sections of the media concerning recent directives applied to BOI Bank – an international bank operating within the jurisdiction of Antigua and Barbuda.

The directives issued by FSRC in carrying out its mandate in accordance with the Financial Services Regulatory Commission Act 2013, as amended are designed to ensure that BOI Bank, like all other licensed financial institutions in Antigua and Barbuda, always satisfies the requirements of the International Banking Act 2016, as amended.

The directives are not a result of any findings that BOI Bank is impaired, and they do not hinder the Bank from processing the transactions of its clients.

FSRC continuously oversees all financial institutions under its supervision and will provide any further information that is pertinent to BOI Bank. (ends)"

Observers of Antigua & Barbuda will no doubt remind themselves of certain particular banking events, especially those involving single shareholder institutions and those linked to overseas controlling interests.

Minds will turn to recent history that demonstrates Antigua & Barbuda has been recklessly responsible for a long list of bank failures, through government loan repayment defaults, breaches of financial and constitutional obligations, and a judicial system which allows itself to be ignored in most cases dealing with the Government.

Further details are available in Mondaq's Antigua & Barbuda – De-Risking In Jeopardy.

Currently, Scotiabank is trying to extricate itself from the Antigua & Barbuda arena by selling its interests to Trinidad & Tobago based, Republic Financial Holdings.

Its efforts have been met with great resistance and the authorities of Guyana have now joined the twin-island state in frustrating the granting of the necessary banking licences to enable the changes to proceed.

Some observers consider that this may well be in the interests of both RFH and Scotiabank as closures in both countries would avoid being drawn into the financial swamps of Antigua & Barbuda and Guyana.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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