Hopes are rising that there will be a final liquidation settlement of Bank of Credit & Commerce International (BCCI) later this year. This in turn will clear the way for the formal restructuring of Union National Bank (UNB), the Abu Dhabi-based commercial bank that is 40 per cent owned by BCCI.
A heads of agreement document was drafted in the presence of a representative of the BCCI creditors’ committee in May. BCCI
liquidator Touche Ross is now waiting a formal response from the committee. There is no indication whether there will be another mass meeting of creditors similar to one held in May 1993 to consider the first liquidation settlement offer (MEED 11:6:93). This was rejected by the creditors.
If the new heads of agreement is approved by the creditors, the liquidation settlement will then go back to the UK, Luxembourg and Grand Cayman courts for final legal blessing. Once this is secured, BCCI can be fully liquidated and the process of compensating creditors will begin.
Only when this takes place will be it possible for UNB to formalise its new capital structure. This calls for the Abu Dhabi Investment Authority (ADIA) to take over the BCCI stake, raising its share to 50 per cent. The government of Dubai holds 10 per cent and the general public the remaining 40 per cent. The settlement will also clear the way for the election of a new board and the confirmation of the management team that has been directing the bank since the crisis broke.
UNB will not be able to publish a balance sheet until the BCCI liquidation is finalised. Acting chief executive Anwer Sher says UNB is in good shape and holding its own in a competitive market. He says deposits are Dh 4,700 million, which makes UNB the sixth largest deposit taker among conventional UAE banks.
There is growing confidence that the liquidation will proceed later this year. Sources close to the BCCI liquidation say they believe that most creditors recognise that the terms of the settlement, which include a payment from the majority shareholders, will not be improved. BCCI was closed in most international centres on 5 July 1991.