Sao Tome central bank steps in to rescue private bank

24 April 2013

The Central Bank of Sao Tome and Principe (BCSTP) has decided to step in to rescue the Island Bank in order to “re-establish normal operations” at the bank and “ensure banking activities continue under the terms of the current law,” the central bank said Tuesday.

In a statement issued in Sao Tome, the BCSTP said that the decision was also intended to put a stop to “the deterioration of economic and financial indicators,” of the Island Bank, which is Nigerian-owned, which has been “systematic and continuous,” not allowing the bank to honour its obligations, which suggests “an imminent insolvency.”

“The intervention in the Island Bank does not compromise the operation of the institution, which will continue with its business,” although “the authorisations that grant rights for the institution to give instructions for payments, or transfer of assets managed by it,” the state says.

In March the International Monetary Fund (IMF) advised the Sao Tome and Principe central bank to pay closer attention to the country’s banking system, according to the report from a mission that visited the archipelago from 8 to 20 March.

“The mission found that retail banks posted no profits in 2012, that bank loans had come to an almost total standstill and that loan defaults are increasing,” the statement said adding that the central bank should inspect the banks and demand that their shareholders quickly put in place plans to replace capital. (macauhub)