Premier Fahie: Banks Profitable, Law Will Force Protection For Depositors
Premier and Minister of Finance, Hon. Andrew Fahie plans to enact a law that will offer depositor's protection and has enlisted the help of world renowned expert in the field, Vilma Rosa Leon-York.
"The implementation of this policy will bring long-overdue protection and relief to all Virgin Islanders and residents. It will breathe life into legislation that was passed in this House of Assembly and which has been laying in a state of suspended animation for almost four years," Premier Fahie said in a statement to the House of Assembly yesterday, February 21.
The Premier indicated that The Virgin Islands Deposit Insurance Act, 2016 sought to establish the Virgin Islands Deposit Insurance Corporation and a Deposit Insurance Fund for the purpose of providing protection to depositors, especially those who some may describe as small and unsophisticated, as they are not in a position to assess the risks of the institution in which they may put their hard-earned savings.
He explained that the full establishment of the Corporation and Fund would meet international requirements and address the recommendations found in the Michael Foot Report of 2009 and the International Monetary Fund, Financial Sector Assessment Program (FSAP) in 2010.
According to Hon. Fahie, establishment of such a scheme would provide Government, in conjunction with the Supervisory and Regulatory authorities, with a more formal mechanism for dealing with problem financial institutions, with a view to protecting depositors and their funds.
Currently, there are five the banks operating in the BVI as a subsidiary or a branch. Premier Fahie stated that this leaves the Territory banking institution more susceptible to external forces in such a crisis.
"The records would show that banks operating in the BVI have been quite profitable over the years and at the same time not offering any protection to depositors. We are operating in a global environment and if the BVI is to remain competitive, our banking institutions must keep pace," the Premier stated.
Since the passage of the Act, the Ministry of Finance has been tasked with the development of subsidiary legislation and resolution powers to support the Act.
However, Hon. Fahie stated that identifying individuals who possess the expertise in this specialised field have proven to be elusive, and as a result, the Ministry of Finance has been having difficulties sourcing such a specialist that can address the legal requirements required to develop a framework.
The Premier revealed that through persistence and dedication to task, Government was able to enter into a Consultancy Contract with Leon-York to provide the necessary legal and resolution framework for a cutting edge Deposit Insurance Corporation (DIC).
According to the Premier, the work is expected to take approximately 928 hours or 24 weeks to complete over a one-year period. Simultaneously, he said Government will be instituting the Board which will commence the other logistical works required for the proper operation of the Corporation and its Board.
"It is your Government’s intention for the Virgin Islands Deposit Insurance Corporation to be implemented before 1 January, 2021. This would give the financial institutions sufficient time to make the necessary preparations and for full compliance with the referenced legislation," the Premier stated.
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