26 December, 2009


We still have not been told why the Eastern Caribbean Central Bank is suggesting that the National Bank of Anguilla needs to merge with the Caribbean Commercial Bank.  In frustration at the lack of published information I have been doing a little digging.  Someone suggested I have a look at C Hoare & Co.  Hoare’s, like the National Bank, is a small bank.  Neither deals in derivatives.  Both provide private banking, financial planning and investment services that include loans, mortgages, savings accounts and investment advisory services. 
Hoare’s 2008/2009 accounts have been published.  So have NBA's accounts.  Hoare’s has just ₤1 billion in assets.  NBA has just EC$1 billion in assets.  The international recession started in December 2007, and hit both banks simultaneously.  Hoare’s profits show a decrease from 2007 to 2008.  Profits went down from ₤17 million the previous year to ₤15 million.  NBA’s went down from EC$19 million to EC$17 million.  The ratio of fall in profits is astonishingly similar.
Hoare’s was founded in 1672, some 20 years before the Bank of England (founded 1694).  Hoare’s is the oldest private bank in the UK.  It is considered a very successful bank.  Yet, it is tiny by comparison with other British banks.  It has survived one financial crisis after another, while the banking behemoths around the world were failing. 
It does not matter how small a local bank is.  All that matters is how carefully it is managed.  If it is not carefully managed it does not matter how big it is, it will still fail.
So long as any small local bank is taking two-thirds of the profits each year and putting them into reserves, it will do well.
This assumes that it is not making too many dodgy loans.
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  1. "My Bankers are Hoare's." -- Jack Aubrey

    (Not as good as "...you've debauched my sloth!", but it'll have to do under the circumstances...)

  2. Certainly a pessimistic outlook - I think you may be surprised!

  3. Please forget my comment about being surprised - meant for the golf post

  4. It surprising that the GOA are willing back such an outrageous plan when the people of Anguilla sacrificed and gave allthat they had to keep those institutions afloat when others were willing to let them die.Is this the thanks we get for protecting our finantial wellbeing or assets?

  5. Why is the proposed merger an "outrageous plan"? What did I sacrifice to keep the two banks afloat? What is the nature of the "backing" that GOA is giving to this proposal? Do they have any choice? Do the banks themselves have any choice? What is the nature of the "protection" I have given to protect my "finantial [sic] wellbeing or assets"? What, specifically, was done to prevent the "death" of the two banks? Who gave "all that they had"?

  6. Well,for one, when bank of america folded Anguillians put forth the effort in helping create NBA ,where were the regulators then?We have not heard any information that our local banks are failing so why are they forced to go into this merger?What's so outrageous?The fact that with a merger comes a monopoly,if there is only one banking institution on the island then we all will suffer.Who will offer competitive or comparable services to the islanders.Also there is the fact that many of our people will loose their jobs.Have you ever thought about that, my dear anonymous, before you stop to highlight my typos?Apparently you are not in the know as to how these local banks came into exsistence.Anguillians gave and placed all their savings and hard earned monies into backing and building these banks.The GOA should as a matter of course stand up and represent their interests.We shoukd not be forced into merging just because the other Caribbean bankers think so.

  7. Bank of America did not "fold." It offered its local branch for sale and many Anguillians bought shares in the new company, NBA. This was an investment, not some heroic and sacrificial deed. At the time, before we joined the ECCB, it was The Wild West and there were no effective regulators. It was animal house banking in the ethics-free zone.

    We HAVE heard quite a lot of talk about the two banks failing. It's been coming from APP advisors and is their usual lies. Similar to yours when you imply that there are only two banks in Anguilla.

    Nobody sacrificed everything to keep the two banks afloat, as you claim. If that claim is true, if they are both that weak, they should be merged. Thank you.

    The proposal to merge the two local banks was fairly well advanced but died when Billy Herbert, may his glory be magnified in heaven as it is on earth, disappeared. Yes, a small number of people will lose their jobs in a merger. That, in fact, is one of the reasons for the merger. Banks are profit making companies, not social services agencies formed to protect and benefit their employees. They are unlike the airport terminal, which employs five full time sweepers. Is it true they're all voters in District 2?

    As to how CCB came into existance, the FBI called Billy Herbert "The world's largest money launderer." The FBI are not frivolous people who just make stuff up like Hubert. It is obvious to any fool why Dr. Herbert founded a bank, why he chose to do so in Anguilla and how the father of our nation would up with a large block of the shares.

    And here we are. Y tu mama tambien.


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