Published On: Tue, Jul 9th, 2024

Central Bank says it has become pro-active after Girobank disaster

PHILIPSBURG — The Central Bank of Curacao and St. Maarten (CBCS) has learned some valuable lessons from the downfall of the Girobank and from the report Deloitte Netherlands produced about this situation.

In December 2013 the Girobank was placed under the emergency measure and the Deloitte-report describes what happened in the period 2013-2019. In December 2019 the Girobank was the target of a bank run. That same month the bank went out of business.

The CBCS published a report this month, stating that it has changed its system of supervision in 2021. The Bank now uses stricter supervision standards. Among these measures are stricter rules for the financial buffers banks and insurance companies must have, minimum requirements for risk management and corporate governance and minimum requirements for the fight against money laundering and the financing of terrorism.

The Bank says that is approach has switched from reactive to pro-active: it will not wait for a financial institution to break the law but it will already intervene when the risk that this happens increases.

If a financial institution is taken over by a new majority shareholder the process requires prior approval from the Central Bank. CBCS will separately review the reliability and the financial stability of a new ultimate beneficial owner (UBO) and it will require information about the origin of the money that is used to finance a takeover. The Bank also wants to be able to use fines and penalties to correct wayward behavior.

The 2019 bank run on the Girobank has emphasized the importance of a deposit guarantee system the CBCS writes in its report. Such a system is necessary to combat uncertainty among the public and to ensure that account holders can get at least a part of their money back in case a financial institution goes out of business. The report states that work on a deposit guarantee system began in 2020. “We expect that it will be ready shortly.”


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