Bank of England in the dock over BCCI collapse
(20 January 2004 – UK) The Bank of England has been sued for the first time in its history over its role in the collapse of Bank of Credit and Commerce International (BCCI) almost 13 years ago.
BCCI went belly up after not being able to recoup huge amounts of ordinary depositors’ money it lent to a handful of investors, leaving 80,000 mostly British depositors £5 billion (A$12 billion) out of pocket in total.
The Bank of England has been accused of lying to the Government over the way it regulated BCCI. The court case is expected to last more than a year and could cost £50 million (A$120 million) in legal bills.
Ironically, the current Chancellor (Treasurer), Labour’s Gordon Brown, was in opposition at the time and called for creditors to be compensated. If he belatedly gets his way, it could prove expensive for the Treasury.
If BCCI’s liquidator, Deloitte & Touche, wins its case against the Bank, the Treasury may have to pay compensation of up to £1 billion (A$2.4 billion) of public money.
In further UK news, one of Britain’s major banks, Abbey National, is set to close the doors on its £29 billion (A$69 billion) fund management operation in Glasgow in an attempt to salvage something from its calamitous corporate banking business.
Last year Abbey reported losses of £1 billion (A$2.4 billion), due in large part to poor performances in the bank’s private equity and corporate loan divisions.
The bank is expected to hand over management of the funds to US bank State Street, a move that could result in the loss of some 170 jobs at Abbey’s Glasgow operations.
Abbey has sold off more than £40 billion (A$95 billion) of assets and instead focussed on its retail banking business. It has also announced that it will sell its private equity business to Coller Capital for about £300 million (A$713 million).
The Bank of England has been accused of lying to the Government over the way it regulated BCCI. The court case is expected to last more than a year and could cost £50 million (A$120 million) in legal bills.
Ironically, the current Chancellor (Treasurer), Labour’s Gordon Brown, was in opposition at the time and called for creditors to be compensated. If he belatedly gets his way, it could prove expensive for the Treasury.
If BCCI’s liquidator, Deloitte & Touche, wins its case against the Bank, the Treasury may have to pay compensation of up to £1 billion (A$2.4 billion) of public money.
In further UK news, one of Britain’s major banks, Abbey National, is set to close the doors on its £29 billion (A$69 billion) fund management operation in Glasgow in an attempt to salvage something from its calamitous corporate banking business.
Last year Abbey reported losses of £1 billion (A$2.4 billion), due in large part to poor performances in the bank’s private equity and corporate loan divisions.
The bank is expected to hand over management of the funds to US bank State Street, a move that could result in the loss of some 170 jobs at Abbey’s Glasgow operations.
Abbey has sold off more than £40 billion (A$95 billion) of assets and instead focussed on its retail banking business. It has also announced that it will sell its private equity business to Coller Capital for about £300 million (A$713 million).
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