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Antigua defends investment in ‘unhealthy’ bank

Published:Wednesday | June 29, 2016 | 6:00 AM
Prime Minister of Antigua & Barbuda, Gaston Browne.

Prime Minister Gaston Browne is defending the decision of his administration to invest EC$30 million in the locally owned Caribbean Union Bank (CUB), saying it should not be regarded as a bailout.

"The acquisition of CUB is really is really of strategic interest to the government of Antigua & Barbuda, as opposed to a bailout, as they may wish to put it, and I believe that in due course that they will see the wisdom of that acquisition," Browne said on Observer radio Monday.

"Again, we have a government that is sufficiently entrepreneurial that we believe we can take on some proven risks in sections of the economy in order to ensure that the economy functions in a way ... and that it is even more efficient than it is presently," he said.

Prime Minister Brown had cautioned banks operating here that they should expect competition from the government and accused the financial institutions of being opposed to taking risks.

Earlier this month, the government announced it was buying a controlling stake in CUB.

The former president of the Eastern Caribbean Currency Union Bankers Association, Michel Williams, said the planned investment should be seen as nothing more than a bailout.

"You can wrap it anyway you want, but it is a bailout. There are things that the government can do, even if they still want to do this intervention, but it must do the other thing to create an enabling environment and I think those things are going to go a lot further to loosen credit conditions in Antigua," Williams said.

Prime Minister Browne acknowledged that the CUB "may not have been the soundest of banks", but noted that, "for various reasons, including strategic reasons, we have chosen to take an equity stake".

Referencing what he said were notions that CUB was unhealthy and needed a bailout, he rationalised, "We would have had to bail it out anyway."