Clients of Prime Bank (Gambia) have been told to withdraw their deposits from the bank, as it failed to augment its capital to the new requirement established by the Central Bank of The Gambia (CBG).
As a result of its failure to meet the new CBG capital requirement of D200 million by 31st December 2012, Prime Bank (Gambia) Limited will not be operational within the jurisdiction of the Republic of The Gambia.
However, it "is sufficiently liquid to meet its obligations to depositors, other creditors and any other person entitled to funds or property thereof," according to the CBG.
Customers wishing to collect their deposits should contact the Liquidator, Pannell Kerr Forster (PKF) at the bank's head office at 42 Kairaba Avenue," a 21st January press release from the CBG stated.
The Central Bank issued a directive in 2008 increasing the minimum capital of banks in two stages from D60 million to D150 million by end-December 2010, and to D200 million by end-December 2012.
This is because a higher minimum capital requirement serves several purposes, according to the CBG.
According to the release: "(i) It would ensure that banks are better able to withstand periods of economic and financial stress; (ii) Maintains market confidence in the solvency of the banking system; (iii) Imposes market discipline, and (iv) Provides a large cushion to absorb losses as well as protect tax payers from the risk of being called upon to bail out failing banks; and (v) ultimately, enhances the safety and soundness of the Gambian banking system which, in turn, promotes economic growth.
Reason for the bank's budge
Prime Bank has had to call it quit from The Gambia banking industry because its parent bank Societe General de Banque Liban (SGBL) has opted to divest its subsidiary in The Gambia, hence the decision not to augment the capital of Prime Bank (Gambia) Limited to the required minimum capital of D200 million.
So its subsidiary in The Gambia would have to stop operation.
The CBG release elaborated: "Consequently, Prime Bank (Gambia) Limited sought and obtained the approval of the CBG to go into voluntary liquidation."
The CBG also stated that 12 out of the 13 banks operating in The Gambia met the minimum capital requirement as at the deadline of 31st December 2012.