Bramer Bank’s licence revoked by Bank of Mauritius on public interest grounds
Bramer Bank’s licence stands revoked since yesterday, with the Bank of Mauritius noting that its capital is seriously impaired, and it has been experiencing large withdrawals of deposits which placed it in a precarious liquidity situation. (Image: crisisboom.com)
Investors and customers of Bramer Banking Corporation Ltd (BBCL) are on high alert as the bank`s licence has been revoked, according to a communiqué released by the Bank of Mauritius (BoM) citing the latter’s non-compliance with banking regulations as the reason for the revocation.
To provide a context to the revocation, upon onsite examination at BBCL by BoM from 22 January to 20 February 2015, a number of significant deficiencies had been noted, with BBCL experiencing large withdrawals of deposits which placed it in a precarious liquidity situation. The liquidity was further worsened by its difficulty to raise funds on the interbank market, and BBCL has relied heavily and continuously on a daily basis since 6 March 2015 for overnight facility from the central bank.
The communiqué also stressed “The capital of BBCL is seriously impaired. BBCL has failed to demonstrate its ability to address capital and liquidity issues to the satisfaction of the Bank.”
The minimum cash reserve requirement was also not respected by the bank as from 05 March 2015 – therefore BoM as the trusted custodian of the banking industry of Mauritius was faced with no other option than revoking the bank’s licence on public interest grounds, under Section 17 of the Banking Act 2004.
This bold move taken to revoke Bramer Bank’s licence demonstrates that the Bank of Mauritius is a responsible institution that strives hard to promote sound banking practices in Mauritius, for which the island economy is renowned on the international front. It may be noted that BBCL is a local banking major, which was issued a banking licence on 27 August 2008.
BBCL’s prevailing conditions would have posed serious systematic risks to the domestic financial system if BoM had not intervened, and the interest of depositors and the public would have been in serious jeopardy.
It may be noted that the Board of Directors of BBCL have appointed Messrs Andre Bonieux and Mushtaq Oosman as receivers pursuant to section 75 of the Banking Act 2004 and the Stock Exchange of Mauritius has immediately suspended dealing in the securities of BBCL — until further notice.