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(CNS Business): IBG bank in the Turks and Caicos Islands, which is majority-owned by Cayman National Corporation, has closed just over two years after it opened its doors for business. Citing losses that had “far exceeded original expectations”, CNC said Tuesday that it was undertaking an orderly wind-down of the retail banking operation in the TCI, blaming its failure on the world-wide economic crisis, the uncertainty that the constitutional crisis in the Turks & Caicos Islands generated, and the impact of the failure of TCI Bank, which collapsed in April 2010, three months before IBG opened. Governor Ric Todd said in a statement that the International Banking Group (IBG) was a relatively small operator and its closing was not a reflection of low confidence in the TCI economy.
Cayman National emphasised that the closure of the bank in the Turks & Caicos Islands would not affect its operations in the Cayman Islands or in any other of the jurisdictions in which it operates.
CNC said yesterday that it had decided to become an investor in IBG some years ago, at a time when economic conditions were far more favorable than they are now. In the original business plan for IBG it was predicted that the new bank “would be loss-making for the initial period of trading but various unique events have conspired against the success of the new bank. These 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.”
The directors of IBG decided that the responsible action was to undertake an orderly wind-down of the retail banking operation in the Turks & Caicos Islands and to ensure all the depositors of the bank are paid out in full. “This process will now commence and customers of the bank in the Turks & Caicos Islands are being advised accordingly. We would also mention that for practical reasons it is preferable for IBG to continue to provide merchant service and credit card facilities.”
TCI Governor Ric Todd said that the closure of IBG did not compare with the TCI Bank situation from 2010.
He said the Financial Services Commission was in discussion with the International Banking Group to ensure that all depositor’s funds would be protected and returned to them as soon as possible, that the bank would seek to sell on all loans on their books to another commercial loan provider, and that IBG would contact their local shareholders directly to discuss their position.
“This action by IBG does not mean that the commercial banking sector in TCI is in trouble,” Todd said. “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.”
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