15 January 2014

Liberia: 'LBDI Is Financially Sound'

The Central Bank of Liberia(CBL) has expressed serious concern over the story carried on the front page of two journals, the News newspaper and the Concord Times, that the Liberian Bank for Development and Investment (LBDI) is becoming insolvent. The CBL hereby informs the public that LBDI is liquid, solvent and financially sound.

According to a release issued yesterday, the CBL said as the public is aware, as part of the CBL's regulatory requirements, LBDI, like other banks in Liberia, publishes its financial statements on a quarterly basis in local dailies.

The CBL said the publication of these financial statements is a manifestation of transparency and information disclosure, a requirement under the new Financial Institutions Act of 1999 and the International Financial Reporting Standard (IFRS) adopted by the CBL.

The CBL's financial soundness indicators show that LBDI's liquidity ratio is 47% - 32% above the minimum 15% prudential requirement; the capital adequacy ratio is 19% - 9% above the minimum capital requirement.

"The bank's reserves with the CBL collectively are more than US$40 million. Against this background, it is quite obvious that the story about the Government of Liberia writing to the CBL to loan LBDI US$7.5m is untrue, baseless, and malicious," the Central Bank of Liberia said.

The CBL said being the regulator of banks and non-bank financial institutions; it has been very robust in the examination of financial institutions, using Risk-Based Supervision as one of its key examination tools.

The CBL said it has on-site examiners that conduct examination of financial institutions on a routine basis, and respond to early warning signals from any bank. "There is also an off-site surveillance team that analyzes various financial reports submitted at different intervals to the CBL," the Central Bank said.

"Let it be emphatically clear that the CBL has at its disposal the requisite resources, which, in its capacity as lender of last resort, could provide a cushion for any bank should there be a liquidity crisis," the CBL release concluded.

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