The UAE branches of Bank of Credit and Commerce International have been liquidated some 22 years after the fraud-hit lender was shut down in one of the biggest banking scandals of the time.
After 22 years, UAE branches of defunct BCCI finally liquidated
The UAE branches of Bank of Credit and Commerce International (BCCI) have been liquidated some 22 years after the fraud-hit lender was shut down in one of the biggest banking scandals of the time.
The Central Bank yesterday issued a statement confirming the liquidation of BCCI's local branches. It also instructed the Ministry of Economy to register completion of the liquidation and strike the branches from the Commercial Registry.
BCCI gained notoriety for widespread fraud and illegal activities that ultimately led to its closure in the early 1990s.Regulators from the UK, Luxembourg and the Cayman Islands closed the bank in 1991 after uncovering the laundering of drug money and other fraudulent transactions.
Before the bank's collapse in July that year it had operations across 73 countries, making it one of the largest liquidations as of that time.
As of June 1991, BCCI held assets of US$16.9billion but was insolvent, with billions of dollars of unrecoverable loans and unrecorded deposits, coupled with "such widespread fraud" that its financial history could not be determined, the bank's liquidators wrote in a report last year.
One of its UAE operations, BCC-Emirates, ultimately became part of the bank now known as Union National Bank.
BCCI had eight branches in the UAE which were a major source of retail deposits. Though liquidators for that unit were appointed in 1996, its liquidation was not completed until last month.BCCI operations in the Cayman Islands were liquidated in March this year, with the bank's businesses in England, Scotland and the Isle of Man following in May.
The Abu Dhabi Government, a majority shareholder in BCCI at the time of its collapse, agreed to compensate small creditors as well as contribute $2.2bn to the bank's liquidation funds, according to the liquidators' report.
The Central Bank also put in place a creditor protection scheme for the benefit of creditors of the local branches of BCCI.
Between March 1997 and2010, the Central Bank provided Dh55.9m to repay approximately 10,000 small creditors with claims of Dh20,000 or less.