EN-8 EN-8 Administration
EN-8.1 EN-8.1 Legal source
EN-8.1.1
Article 93 of the BMA Decree — Law No. 23 of 1973 ("BMA Law") empowers (but does not oblige) the Agency to assume the administration of a licensee in certain circumstances, subject to the approval of the Minister of Finance. These circumstances are where:
(a) the licensee has become insolvent;(b) its liquidity or solvency are in jeopardy;(c) its continued activity is detrimental to the rights of depositors; or(d) it commits serious contraventions of the provisions of the BMA Law.EN-8.1.2
Article 94 of the BMA Law provides that where the Agency assumes the administration of a licensee, the licensee concerned may appeal to the Minister of Finance and, subsequently, the courts, in order to challenge its administration by the Agency.
EN-8.1.3
Articles 95 to 99 of the BMA Law set down the operating parameters of an administration.
EN-8.2 EN-8.2 BMA Policy
EN-8.2.1
The Agency views the administration of a licensee as a very powerful sanction, and will generally only pursue this option if less severe measures are unlikely to achieve its supervisory objectives.
EN-8.2.2
Although Article 93 of the BMA Law specifies the circumstances in which the Agency may pursue an administration, it does not oblige the Agency to administer a licensee. Faced with the circumstances described, the Agency may pursue other courses of action, if it considers that these are more likely to achieve the supervisory outcomes sought. Because an administration is likely to send a negative signal to the markets about the status of a licensee, other supervisory actions may in fact be preferable in terms of protecting the interests of those with a claim on the licensee.
EN-8.2.3
The criteria used by the Agency in deciding whether to seek an administration of a licensee include the following:
(a) the extent to which the interests of the market, its users and those who have a claim on the licensee would be best served by the administration of the license, for instance because of the potential impact on asset values arising from an administration;(b) the extent to which other regulatory actions could reasonably be expected to achieve the Agency's desired supervisory objectives (such as restrictions on the licensee's operations, including limitations on new business and asset disposals);(c) the extent to which the liquidity or solvency of the licensee is in jeopardy; and(d) the extent to which the licensee has contravened the conditions of the BMA Law, including the extent to which the contraventions reflect more widespread or systemic weaknesses in controls and/or management.EN-8.3 EN-8.3 Procedure for implementing an administration
EN-8.3.1
All proposals for assuming the administration of a licensee are subject to a thorough review by the Agency of all relevant facts, assessed against the criteria outlined in section EN-8.1. After being assessed at Executive Director level, proposals are submitted to H.E. the Governor and subsequently the Minister of Finance and National Economy for their respective approvals.
EN-8.3.2
Once approved by the Minister of Finance and National Economy, a formal notice of administration is issued to the licensee concerned and copies posted in every place of business of the licensee. As soon as practicable thereafter, the notice is also published in the Official Gazette and in local newspapers. The term "in administration" should be clearly marked in all the bank's correspondence and on its website, next to the bank's name.
EN-8.3.3
Article 94 of the BMA Law allows a licensee 10 days following the administration taking effect in which to appeal to the Minister of Finance. If the Minister refuses the appeal, the licensee has a further 10 days from the date of the refusal in which to lodge an appeal at the courts. So as to reduce the potential damage of an administration order being applied and then withdrawn on appeal, where feasible the Agency will give advance notice to a licensee's Board of its intention to seek an administration, and allow the Board the right of appeal prior to an administration notice being formally served.
