Yacoob Ramtoola of BDO, the Special Administrator of the now defunct British American Insurance Co (BAI) appointed by the Financial Services Commission, asked that the assets of the former Bramer Banking Corporation Ltd, be transferred in favour of the newly created National Property Fund which he is administering. His objective is to collect those banking assets to pay back certain insurance policy holders of the ex-BAI and investors into the now defunct Bramer Asset Management Ltd which fall under his charge. It is the job of such administrators to look out for funds from whichever source they can to bridge their financing gaps.
“The government, it appears, has guaranteed the repayment of depositors’ money of the ex-Bramer Bank and the former MPCB in the new incarnation, the Maubank. It has thus taken on the moral hazard of finding the funds from the Treasury to the extent existing assets of the two merged banks were still insufficient to meet their obligations vis-à-vis depositors. That would normally imply that the depositors will get back their money from the taxpayers’ exchequer no matter whether the assets previously acquired by the ex-Bramer Bank using depositors’ money finally fetch less than what they are valued at due to their further impairment. Now, part of those assets are likely to be taken away by the Special Administrator, increasing the government’s moral hazard…”
“Will not the ex-Bramer Bank (part of the Maubank now) become an emptier shell deprived of the assets taken away by the ex-BAI Special Administrator to meet liabilities not in any manner connected with or incurred by it? The Maubank being now deprived of those banking assets, will not the Ministry of Finance have to replenish the Maubank with an even larger amount of taxpayers’ money, due to the aggravated deficit in its finances caused by the removal of its assets by the ex-BAI Special Administrator?”