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Archive -Seychelles

CBS comments on BMI Offshore Bank’s “operational issue” |25 October 2014

The Central Bank of Seychelles (CBS) has commented on the situation currently being faced by the BMI Offshore (BMIO) Bank, where it is not able to effect outward foreign currency denominated transfers for its customers.

This is in view that such transfers need to be carried out through a correspondent bank and BMIO’s correspondent banking relationship has been discontinued as of October 13, 2014.

Correspondent banks are used by banks in order to service transactions originating in foreign countries, and act as the banks’ agents abroad.

Since BMIO’s business model is focussed on banking with non-residents and in foreign currency, the bulk of BMIO’s transactions need to be carried out through a correspondent bank, which acts as BMIO’s agent in order to accept deposits of BMIO’s customers from foreign banks, or make payments by BMIO’s customers to foreign banks.

CBS, together with the Financial Intelligence Unit (FIU) is currently undertaking an examination of the bank, the findings of which will allow for the assessment of the reasons that have led to the loss of BMIO’s correspondent banking relationship.

CBS highlights that the ongoing issue at BMIO is an operational issue rather than one related to the bank’s financial soundness.

In a press release issued yesterday, CBS said: “BMIO is financially sound. On the basis of information that is submitted periodically to CBS, BMIO is sufficiently liquid. Its liquid assets to total liabilities ratio, for which CBS prescribes a minimum ratio of 20 per cent, is well above the requirement.

 Capital is also important to buffer against losses. BMIO is well capitalised and operates above the minimum capital requirement of R20 million. Its capital adequacy ratios are also above the minimum requirements stipulated under the Financial Institutions Act, 2004 as amended and the Capital Adequacy Regulations, 2010.”

As regulator of the banking system, one of CBS’ role is to ensure that depositors’ interests are safeguarded.

“On the basis of financial soundness indicators compiled by CBS, there is no indication that depositors’ money held with BMIO are in danger, although access to the deposits will only be enabled upon resolution of the issue. Once the underlying reasons are understood, CBS and FIU will be in a better position to support the re-establishment of BMIO’s operations,” said the CBS press release.

On a general note, CBS highlights that all banks in Seychelles are currently operating in a financially sound manner. Since BMIO’s business model focusses on the offshore market, correspondent banking is crucial for its core operations.

 

 

 

 

 

 

 

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