Luxembourg Starts BCCI Liquidation
Jan. 07, 1992
LUXEMBOURG (AP) _ A court ordered the liquidation of the Luxembourg unit of the failed Bank of Commerce and Credit International to avoid a disorderly run on assets, officials said Tuesday.
Pierre Jaans, the director general of Luxembourg's Monetary Institute, said the bank would have reverted to its normal status on Jan. 6 when a creditor protection plan developed in July expired.
''That would have led to a disorderly run on assets and would have seriously impaired the equality of creditors,'' he said.
The Luxembourg court ordered the liquidation of the bank's Luxembourg operations on Jan. 3. It is expected to be followed by a liquidation order in Britain on Jan. 14 and similar judgements in other countries.
Jaans said the liquidation was unlikely to affect talks on a creditor compensation proposal between BCCI's liquidators, Touche Ross & Co., and BCCI's main shareholder Sheik Zayed of Abu Dhabi.
The Luxembourg unit had around 4,000 customers, who will all be eligible for the Luxembourg deposit guarantee program, Jaans said.
The plan, run collectively by all Luxembourg banks, provides individual depositors with up to $16,100 if a bank encounters difficulty.
The liquidation of the BCCI unit in Luxembourg is expected to cost the deposit program around $52 million.
''It should give full satisfaction to three quarters of the customers,'' Jaans said. The remaining customers will get more of their money back after operations are liquidated.
Jaans said it was too early to say how long the liquidation process might take.
BCCI was seized by bank regulators in about a dozen countries in July following audits that showed widespread fraud to cover huge bank losses on loans. Though losses totaled several billion dollars, the precise amount lost may never be known.