US-designated ‘Money Laundering’ Bank In Gambia Cut-off Operation

PBG goes into voluntary liquidation, says Gambia's Central Bank

Prime Bank Gambia (PBG) Limited, which the United States Government accuses of “money laundering” and “funding international terrorism”, is shutting down operations in Banjul.

 

On Jan. 22, 2013, Gambia’s Central Bank (CBG) said Prime Bank is closing as a result of its parent company, Societe General de Baque Liban’s (SGBL) decision to divest its subsidiary in the country.

The CBG also said Prime Bank’s parent company SGBL decided not to augment the bank’s capital requirement to a minimum capital of D200 million. 

The CBG guaranteed that Prime Bank, which opted for “voluntary liquidation”, is sufficiently liquid to meet its obligations to depositors, other creditors and any other person entitled to funds or property thereof.

In 2008, the CBG, Gambia’s main regulator of the financial industry, decided to increase the minimum capital requirement of banks in two stages - from D60 million to D150 million and D200 million – effected in December 2010 and December 2012 respectively.

In two years, Prime Bank becomes the second financial institution in The Gambia to liquidate, after Oceanic Bank Gambia, a subsidiary of the Nigerian-owned Oceanic Bank Plc, also failed to meet the minimum capital requirement of D150 million in 2010.

Forced

Prime Bank and a host of Lebanese businesses including the Lebanese Canadian Bank (LCB) were blacklisted by the US Treasury Department on allegations of money laundering, drug trafficking and financing of terrorism.

SGBL deputy general manager claims they were forced to take over Prime Bank Gambia due to certain liabilities, Africa Business reports.

“From day one we were forced to take over Prime Bank Gambia as a result of our acquisition of certain assets and liabilities of the Lebanese Canadian Bank,” Georges Saghbini said.

“We never controlled the bank, we did not do correspondent banking with the bank, it was never an affiliate of ours,” added Saghbini who cited the US classification of the bank as suspected money-launderer as reasons.

Bleak financial industry

As of 2010, 14 commercial banks operating in the country competed for a rather small clientele.

Independent observers who painted a bleak future for the banking industry say most of the banks are running at a loss as they’ve been unable to increase their capital internally on their own. 

For instance, only eight of 14 banks were able to increase their capital requirement to D150 million in time for the CBG deadline of December 2010.

The other five only managed a last-minute gasp to raise the required capital; one was forced to close-down operations, while the Central Bank threatened to revoke licenses of defaulting banks.

Oceanic Bank Gambia closed in January 2011 in similar fashion

The CBG says a higher minimum capital requirement would ensure that banks are better able to withstand periods of economic and financial stress and therefore support economic growth.

It also maintains market confidence in the solvency of the banking system; and imposes market discipline, provides a large cushion to protect tax payers from the risk of being called to bail out failing banks, it added.

Panic-stricken clientele

Gambia News Online reported that the liquidation of Prime Bank Gambia has caused some general panic and confusion in the banking industry.

It said customers of the bank and other banks in the country are afraid that such a big bank is wrapping up at this point in time.

When the CBG announced the closure of Oceanic Bank Gambia in January 2011, Panic-stricken customers quickly stormed the Bank’s offices along Kairaba Avenue to suck dry their accounts.   

Gambian-based Banks managed to contain a global financial stress in 2008-2009 but the closure of the two Banks within a short period in recent years has increased the uncertainty in the country’s financial industry.   

Written by Modou S. Joof

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