Worldwide BCCI Claims Could be Pooled Under Deal
LONDON (AP) _ Worldwide claims against the scandal-ridden BCCI could be pooled and creditors could recover up to 40 percent of their deposits under a deal being negotiated with Abu Dhabi, the bank’s receivers said late Friday.
The deal would involve the government of Abu Dhabi providing a cash payment, which reportedly could amount to $2 billion, to pay creditors who participate in the pool, the accounting firm Touche Ross said.
In return, creditors would be asked to waive further claims against Abu Dhabi, BCCI’s main shareholder with a 77 percent stake, Touche Ross said.
The accounting firm said that actual liabilities and full recovery possibly wouldn’t ″be known for many years.″
″Discussions, although far advanced, aren’t finalized. But all parties are hopeful that a final agreement can be signed before the end of the year,″ Touche Ross said in a statement.
International banking regulators seized BCCI on July 5 following an auditor’s report that alleged massive fraud involving billions of dollars. Since the seizure, Touche Ross has been negotiating a settlement with Abu Dhabi.
The liquidation of the BCCI group of banks has been enormously complex because it operated in about 70 countries worldwide. The governments of at least 21 nations have started proceedings to dismantle BCCI branches and sell assets to recoup losses from the multinational bank.
Some, like the British, want to make claims on BCCI assets in another country. Bank regulators in the United States previously had opposed pooling of assets if it meant a reduction in payout to U.S. creditors.
Following BCCI’s seizure, many of the bank’s 1.1 million depositors had no more than limited access to the $19.5 billion on deposit.
The payout plan involves ″a pooling arrangement″ in which property and assets of Bank of Credit and Commerce International SA of Luxembourg and its sister company BCC (Overseas) Ltd. of the Cayman Islands would be placed together for distribution to creditors worldwide, Touche Ross said.
Such an arrangement would streamline liquidation of BCCI and help avoid long delays in settling claims against the bank, particularly given the numerous jurisdictions involved.
BCCI SA creditors could receive 30 to 40 cents on the dollar, it said.
The Touche Ross statement referred only to BCCI SA and BCC Overseas - which represent the bulk of the banking group - and made no mention of the affiliated BCCI companies. So such a plan’s effect on creditors of the other arms of BCCI was not immediately known.
Spokesmen for Touche Ross and BCCI could not be reached in London late Friday.
Touche Ross, appointed by Britain’s High Court as BCCI’s provisional liquidator, said it would ask the court to postpone until mid-January a hearing on the liquidation of the international bank to allow negotiations to continue.
The hearing had been scheduled for Dec. 2.
The plan’s ″details will depend upon the ultimate liabilities of the companies, as well as the recoveries in the liquidation″ of BCCI, Touche Ross said.
But it maintained that creditors would benefit and that payments would be accelerated under the plan.
The Bank of England, which favor liquidating BCCI, said it wouldn’t oppose a delay of the court hearing if the plan could return more funds to BCCI depositors.
″We would obviously have to study details of the proposals when they are available,″ said a central bank spokesman, who wasn’t identified, in accordance with bank practice. ″We certainly welcome any measures that can increase the recoveries for creditors.″