FrontPageAfrica (Monrovia)

Liberia: LBDI Dismisses 'Near Insolvency' Reports, Crisis At Bank

Monrovia — The Liberia Bank for Development and Investment has reacted to two newspapers, publication banner headline "Near Insolvency: serious financial crisis hit LBDI and LBDI on the verge of insolvency."

The Bank at a news conference Tuesday at its 9th street headquarters said, the Monday edition of the News and Concord Times newspapers printed articles with verbatim paragraphs with misinformation intended to cause panic and create confidence crisis that could lead to a run on the Bank.

According to Mr. John David, President and CEO of LBDI the actions are being carried out by detractors of the Bank to undermine the stability of the banking sector as well as the hard earned progress made by the sector.

David Said: "the board of directors, management and staff of the Bank wish to assure shareholders, customers, investors, and the public that the Bank remains strong, viable and solvent and is compliant with the requisite financial soundness indicators governing banking in Liberia."

The Bank president accused the two papers of failing to ascertain the facts on the information before publication; "what is more disturbing is the inability of the papers to take note of financial soundness indicators returns of the Central Bank of Liberia which are available and speaks to insolvency of any bank".

The LBDI President continues: "in banking terms, a bank is insolvent when it can no longer meet its financial obligations with its depositors, or lenders as payment becomes due; but this is not the case with the LBDI as the articles tend to suggest."

In further statements the Bank president stated as reference that; the Bank minimum reserve holding at the Central Bank of Liberia in 2013 was 23.71M USD and 1.29B LRD, the Minimum liquidity ratio set by the Central Bank of Liberia (CBL) is 15%. LBDI liquidation ratio as of December 31st is 47% and reflects a liquidity surplus of 32%.

He also added that the CBL Capital Adequacy Ratio (CAR) requirement is 10%. The CAR of LBDI is 9% in excess of minimal capital requirement and that LBDI on shore and off shore Cash position as at December 31, 2013 is 53.5M USD whilst the bank balance sheet grew by 17%.

The News Newspaper in its Monday edition published that according to reports, the bank has apparently been overwhelmed by borrowing, prompting fears that it might announce insolvency due to failure by the creditors to meet their obligations.

The paper article also alleged that the Government of Liberia is reportedly being named as one of the bank's major borrowers, and that the Bank total accumulation since 1972 reached US$ 56,000 in 2013 the lowest ever in the history of the Bank.

The paper also claimed that LBDI is considering approaching the Central bank for loan to rescue the financial crisis and that the bank has written CBL to loan it US$ 7.5 Million from the US$ 30Million recently given the government by the International Monetary Fund the (IMF).

The two papers also alleged that LBDI claimed that it spent US$ 219,000 on media relations each year and US$ 3.2 Million annually on salaries and US$ 500,000 on professional services. David re-iterated the Bank's commitment of a sound financial policy and promised to continue to be vibrant.

Ads by Google

Copyright © 2014 FrontPageAfrica. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.