UNCLASSIFIED
074031
MDHOAN 7196
LIQUIDATOR. THE EFFECT OF THIS ACTION IS THAT DEPOSITS WITH THE UK BRANCHES OF BCCI SA ARE FROZEN. INFORMATION COLLATED BY THE BANK OF ENGLAND INDICATES THAT THE OPERATIONS OF ALL THE OTHER BRANCHES OF BCCI SA HAVE ALSO BEEN FROZEN, WITH THE EXCEPTION OF JORDAN. IN THE CASE OF BCCI COVERSEAS) BRANCHES IN FOUR COUNTRIES APPEAR TO REMAIN OPEN, THE MOST SIGNIFICANT BEING IN PAKISTAN. THE MAJORITY OF THE LOCALLY-INCORPORATED BANKS IN THE GROUP REMAIN OPEN UNDER DIFFERENT DEGREES OF CENTRAL BANK SURVEILLANCE.
LINE TO TAKE (DEFENSIVE)
2.
THE BCCI BANKING GROUP HAS BEEN PUT INTO EFFECTIVE LIQUIDATION IN A COORDINATED WORLDWIDE OPERATION BY BANKING REGULATORS. THE ACTION RESULTS FROM PRIMA FACIE EVIDENCE OF WIDESPREAD FRAUD AT THE BCCI GROUP IN A NUMBER OF JURISDICTIONS AND STRETCHING BACK OVER A PERIOD OF YEARS. THE PURPOSE OF THE ACTION IS TO SAFEGUARD THE INTERESTS OF DEPOSITORS, OTHER BONA FIDE CREDITORS AND THE SHAREHOLDERS THEMSELVES.
ADDITIONAL POINTS
3.
DIRECT CONTACTS CONTINUE BETWEEN BANKING REGULATORY AUTHORITIES (INCLUDING THE BANK OF ENGLAND AND THE LUXEMBOURG MONETARY INSTITUTE) AND BETWEEN THEM AND TOUCHE ROSS. OFFICIALS FROM THE BANK OF ENGLAND, THE LUXEMBOURG MONETARY INSTITUTE AND TOUCHE ROSS HAVE HAD USEFUL AND CONSTRUCTIVE TALKS AT THE BANK OF ENGLAND WITH A DELEGATION FROM THE UAE, INCLUDING A REPRESENTATIVE OF THE ABU DHABI SHAREHOLDERS. THESE EXCHANGES ARE EXPECTED TO CONTINUE.
4.
THE UK HIGH COURT HAS BROUGHT FORWARD TO 22 JULY THE HEARING OF THE BANK OF ENGLAND'S PETITION FOR COMPULSORY WINDING UP OF BCCI SA. PAYMENTS TO DEPOSITORS UNDER THE UK'S DEPOSIT PROTECTION SCHEME CANNOT BE AUTHORISED UNTIL A WINDING UP ORDER HAS BEEN MADE. THE UK'S DEPOSIT PROTECTION SCHEME WILL ONLY BENEFIT HOLDERS OF ACCOUNTS HELD IN THE UK IN STERLING. HOLDERS OF ACCOUNTS IN OTHER CURRENCIES OR OTHER JURISDICTIONS (INCLUDING THE ISLE OF MAN) HAVE NO (NO) CLAIM FOR COMPENSATION UNDER THESE ARRANGEMENTS. THE BANK OF ENGLAND WILL SEND OUT DEPOSIT PROTECTION FUND CLAIM FORMS FOR UK STERLING ACCOUNT HOLDERS ONCE THE NECESSARY INFORMATION HAS BEEN OBTAINED FROM RECORDS HELD BY THE PROVISIONAL LIQUIDATOR. IT WILL WRITE DIRECTLY TO ACCOUNT HOLDERS AT THEIR GIVEN ADDRESSES. THE DEPOSIT PROTECTION FUND PROVIDES FOR COMPENSATION EQUAL TO 75PCT OF ELIGIBLE DEPOSITS, TO A MAXIMUM PAYOUT TO ANY ONE DEPOSITOR OF PDS STG 15000.
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