WILLEMSTAD – Interim Director of the Central Bank of Curaçao and St. Maarten (CBCS), Bob Traa indicated yesterday during the press conference that the name Giro will disappear. He does not know when. The intention is that clients are transferred to other financial institutions as quickly as possible.
Traa stressed that the basic idea is that they settle the matter in a controlled manner. The Interim Director held a press conference regarding the temporary closure of the Girobank and the freezing of assets above 10,000 guilders. Since the emergency regulation was announced in 2013, Girobank has been supervised by the CBCS.
Traa, who recently announced his departure, has previously advised to borrow 450 million guilders in the Netherlands for the settlement of Girobank. “The government is worried,” says Traa. “The government is under strict regime of the Financial Supervision Act. The debt cannot rise. That is why we are now looking for another way in which the debts of the government remain as limited as possible.”
The attempts to sell the bank have so far been in vain. According to financial and economic director of the CBCS José Jardim, that has everything to do with what happened in the past. “We must not lose sight of that. The core of the problem lies in mismanagement.”
Jardim says that the bank’s lack of capital in 2013 turned out to be much greater than expected. This has to do with the funds that were withdrawn from the company by the American IIG Group.
“The sale of Giro as it stands now is very difficult. Whoever takes over the company will have to invest to close the gap. Moreover, the economic situation of the island is not attractive at the moment,”says Jardim.
A takeover through a merger of the General Pension Fund Curaçao (APC), the Central Mortgage Bank (CHB) and the Postspaarbank (PSB Bank) is off the track. The process that is now being followed is “a takeover in parts”. CBCS wants to place Giro’s activities with various financial institutions. Jardim says that the aim is to remove the customers from Giro as quickly as possible and to transfer them to another financial institution. CBCS will act as an intermediary in that process.”
Part of a “controlled settlement” is that Giro’s assets are sold. “That is the next step,” says Traa. “But you can’t turn that into money overnight.”
Traa points out that continuing with the bank means “only more losses” for the Country of Curaçao. The liquidity support from CBCS to the Girobank has risen to 270 million guilders. “The government is a shareholder in CBCS and it is therefore a loss for the entire population, for all taxpayers.”
The repayment of the debt must therefore be spread over a longer period. A solution is being sought with the government for this. The weakened macro-economy of Curaçao does not contribute to an improvement of the bank’s situation.
There is a structural recession. The economy itself has changed. The old one, based on the refinery, has disappeared, also due to the problems in Venezuela. For a bank that struggles to collect loans, a recession environment is extremely difficult to recover its own resources,” said Traa.
