Banks face 80m pounds BCCI payout bill
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.BRITISH banks were presented with an pounds 80m bill yesterday by the Deposit Protection Board to pay for massive payouts to creditors of the failed Bank of Credit and Commerce International.
The levy, contained in a letter sent yesterday to 489 banks operating in the UK, is meant to cover pounds 58m already paid out by the board to BCCI creditors. Regulators closed BCCI last year following the discovery of massive long-term fraud.
The latest payment had been expected by the banks, who provided for it in their interim results in the summer.
Worst-hit are the big four clearing banks. National Westminster and Barclays will each have to pay an estimated pounds 13m- pounds 14m each within 21 days.
One clearing bank spokesman who wished to remain nameless complained yesterday: 'Why should the banks pay for the mistakes of the regulators?'
And the Labour MP Keith Vaz queried whether the pounds 80m really was needed to cover BCCI payments, or whether the Deposit Protection Board, whose chairman is the Governor of the Bank of England, was merely using the opportunity to replenish the fund after a hard year.
Mr Vaz said that only 15,000 of 40,000 claim forms sent out to BCCI creditors by the board in July last year had been returned. 'There was massive under-claiming. So why is the board levying such a huge amount?'
The Deposit Protection Board pays out 75 per cent of the amount creditors lose in bank failures, up to a limit of pounds 15,000. It said yesterday that it had run up a deficit of pounds 28.9m at the last balance sheet date in February.
This deficit had been covered by a pounds 125m borrowing facility at the Bank of England. Since then, it had to make further payments to creditors of two other failed banks as well as BCCI.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments