PM Timothy Harris in Parliament
Towards the end of July, 2015, a CMC report said: “The controversial Bank Act which seeks to reform the sub-region’s banking sector and give more regulatory power to the Eastern Caribbean Central Bank (ECCB) was passed in Parliament after two days of debate.
While the Act has gone through the other six OECS member states, Antigua and Barbuda, St. Vincent and the Grenadines, Grenada, St. Lucia and Dominica. to include St. Kitts-Nevis, some with amendments. This left only Anguilla and Montserrat still to take action that will see further debate and eventual passage of the Act by the ECCU and the OECS Council.
The new banking Act provides for the regulation and supervision of banking business, the establishment of a single banking space, the ownership structures for licensed financial institutions, the licensing of financial holding companies, the corporate governance of licensed financial institutions, the framework for the official administration of licensed financial institutions and for incidental and related matters.
The Bill is divided into fourteen parts.
Prime Minister Dr. Timothy Harris is the last government to support the legislation. The Prime Minister, underscored the importance of the banking system to the financial health of the eastern Caribbean.
Critics of the Act have expressed concern that only the ECCB will determine whether a license is granted, can revoke that license , veto the appointment of directors, and will command the proceeds of the annual license, thus removing control of the banking sector from the Finance Ministers of individual territories.
Montserrat has been holding out on some of these matters, but along with Anguilla have some concerns among them Constitutional where particularly in Montserrat’s case the Governor deals with banking licences etc.
Premier Romeo, Montserrat
Beginning in April this year Premier Don Romeo seeking feedback from stakeholders before he presents it the Legislative Assembly, invited the media who turned out to join mainly legal practitioners and senior public servants to hear a presentation and discuss the proposed Banking Legislative Reform Act.
Several issues raised were communicated with Governor Venner who has since responded, firstly with a video conference meeting with some stakeholders and eventually to the Government. One former government Minister in the Diaspora along with his lists of observations wrote: “Mr. Minister, in its present form, this ECCB proposed Banking Act is bad for Montserrat.”
Related questions regarding, “Removal of Directors and Officers” got the response that “the aggrieved person has recourse in the courts.
Not unlike other member states Montserrat had concerns about the appearance of the ECCB giving directives to the courts, “in Legal Claims against Central Bank”. The Bannk says this is not novel as, “Legislation can and does provide the factors that a Court ought to take into consideration when deliberating on specific issues.”
The Governor in other forums has said that the ECCB has no intention to regulate Credit Unions and Building Societies as these have their own regulations, but clarity was sought on Section 190 which makes ‘Provision Applicable to Credit Institution, Class of Credit Institution and
Financial Group.’ Clarity given: “credit institution” which refers to “any licensed financial institution other than a bank whose business is that of money lending or the granting of credit facilities.”
Some of the other concerns and questions were relative to: sections dealing with: Annual Audit, Report and Publication of Financial Statements and Results; Section 18 – Offices and Branches deemed one Financial Institution; and Section 19 – Authorisation of Location and Approval of New Business Premises; and also, Minimum Paid-up or Assigned Capital.
The Minister of Finance Romeo hopes to discuss the responses further with stakeholders and then take the matter to his Cabinet and debate in the Legislative Assembly.
