Trust submitted to BoG
…in wake of Stanford investment woes
The Hand-in-Hand Group of Companies has submitted its plan to restore the capital adequacy of Hand-in-Hand Trust for approval by the Bank of Guyana (BoG).
However, according to the Chief Executive Officer of the Hand-in-Hand Group of Companies, Keith Evelyn the plan may take any time between two weeks to three months to be approved by the Central Bank. Consequently this plan cannot be released to the public before then.
Evelyn told Stabroek News recently that the plan is essentially a proposal which outlines how the company intends to increase its capital. According to the law, the regulating body, which is the Central Bank, has to approve this proposal before it is implemented.
Earlier this year, Hand-in-Hand Trust (HIHT) revealed that it had invested approximately $822 million (at an exchange rate of $203 to US $1) over the last year in the Antigua-based Stanford International Bank (SIB). The bank was one of several institutions that were forced to curtail operations after the Stanford Financial Group headed by multi-billionaire Sir Allen Stanford came under scrutiny for running what was a suspected ponzi scheme.
The likelihood of the retrieval of the investment is dim and its loss would erode HIHT’s capital base.
When Evelyn made a public disclosure about the investment at a press conference on March 3, he stated that Hand-in-Hand Trust was treating this investment as impaired. In response to a letter which was published in the March 26 edition of this newspaper, Evelyn said that the impairment of the funds invested in the SIB had affected the company’s capital adequacy. Consequently, the company’s Capital Adequacy ratio would also have been affected. This ratio indicates how much capital the institution has against its assets after catering for risk. It is expressed as a percentage of a bank’s risk weighted credit exposures.
At the press conference, Evelyn stated that the corporation currently has assets in excess of $9 billion and that liabilities to depositors totalled $7.2 billion at that time. Consequently, the CEO said that if the investment to Stanford was not recovered, it would not have a devastating effect on the company.
Hand-in-Hand Trust took a lot of flak from several quarters for their investment in the SIB, with accusations coming from several quarters that they did not conduct adequate due diligence. However, Evelyn has refuted this allegation and said that adequate due diligence was done.
Evelyn stated that the Hand-in-Hand Trust had been investing in the SIB over the past 3 years and said that this bank has always been faithful with its interest payments. He said that the decision to invest in the SIB was made by the Investment Committee of the Company after it had carried out due diligence studies.
The CEO stated that at no time did this arrangement appear too good to be true and said that the interest rate of 7 percent that the SIB was offering was good but not extraordinary.
Meanwhile, Evelyn said that while a legal team has been hired to fight the local company’s claims, recent developments make it clear that it is unlikely any of the money would be recovered. If indeed any of the money is retrieved, it would take some time before it is done, the CEO suggested.
