ECCB 2015/2016 Annual Report

EASTERN CARIBBEAN CENTRAL BANK

Enhancements to the regulatory and supervisory framework continued through the implementation of the ECCU’s Eight Point Stabilisation and Growth Programme and execution of the Comprehensive Resolution Strategy for Strengthening the Resilience of the ECCU Financial System. Additionally, the ECCB partnered with the IMF and The World Bank to implement initiatives to strengthen the financial system through the provision of technical assistance. One of the areas of focus was the strengthening of the ECCU’s legislative tools. To this end, a new Banking Act was commenced in most of the member countries and new legislation for the operationalisation of an Eastern Caribbean Asset Management Corporation (ECAMC) for the management of non-performing assets was passed in each member territory. An initial deadline of 30 September 2015 was proposed for compliance with FATCA. However, the United States Internal Revenue Service revised the timeline to 30 September 2016. To date, four member territories have signed Inter-Governmental Agreements with the US and two have enacted FATCA legislation. In November 2015, the ECCB successfully resolved the ABI Bank Ltd, through the execution of a Purchase and Assumption Agreement with the Eastern Caribbean Amalgamated Bank Ltd (ECAB).

FINANCIAL SECTOR STABILITY

The concept of financial system stability refers to the resilience of the financial system to risks, as evidenced by the strength of the EC dollar, efficiency of the payments and settlement system, a general show of public confidence and improvements in liquidity. The financial system continued to be challenged by the relatively low level of economic activity in some member territories; market structure constraints which refer to small size and growing competition; compliance with regulatory requirements such as the United States (US) Foreign Account Tax Compliance Act (FATCA) and recent de-risking initiatives by large correspondent banks. Credit risk was considered as one of the major threats to financial stability, given the high level of non-performing assets at the commercial banks. The potential for contagion remained high within the ECCU financial system, given the small population size of the region. Regulation and supervision of the banking sector remained a priority for the ECCB with a concentration on the resolution of intervened banks. In that regard, the ECCB continued to execute its duties in relation to the conduct of offsite and onsite risk assessments of licensed institutions. In November 2015, the ECCB successfully resolved the ABI Bank Ltd, through the execution of a Purchase and Assumption Agreement with the Eastern Caribbean Amalgamated Bank Ltd (ECAB). The resolution strategy involved the full protection of depositors and the transfer of selected assets and liabilities to ECAB.

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ECCB A nnual R eport 2015/2016