When BCCI was closed in July 1991, the headlines that followed were dominated by allegations of fraud, money laundering, false accounting, regulatory breaches, and a phrase that came to define the institution: a "criminal culture."
Over time, that label was often applied not simply to specific wrongdoing by specific individuals, but to BCCI as a whole - and, by implication, to thousands of ordinary employees working across its international network who had no involvement in the misconduct.
It is important to be clear from the outset: raising questions about double standards does not mean denying that serious problems existed within BCCI. Where fraud, false accounting, money laundering or other misconduct occurred, those responsible needed to be investigated and held accountable.
The more difficult question is whether the response to BCCI was proportionate and consistent with the treatment of other major banks.
When other large banks were found to have committed serious misconduct, they were investigated, prosecuted, fined, placed under tighter supervision and required to reform - but generally allowed to continue operating.
When other banks encountered serious financial difficulties, governments and regulators used emergency liquidity, recapitalisation, guarantees, restructuring, mergers, public ownership or orderly resolution to preserve viable operations and protect customers.
BCCI, by contrast, got neither path. It got closure.
The comparison therefore falls into two distinct areas.
1. Serious Misconduct Without Institutional Closure
Other major banks have faced extremely serious findings of wrongdoing without being closed as institutions.
HSBC
In 2012, HSBC entered into a deferred prosecution agreement with the US Department of Justice after admitting serious failures involving anti-money-laundering controls and sanctions violations.
HSBC forfeited more than US$1.25 billion, accepted enhanced compliance requirements and independent monitoring, but continued operating as one of the world's largest international banks.
The institution was punished and required to reform. It was not closed.
Foreign-exchange manipulation
A similar contrast arose in 2015, when Citicorp, JPMorgan Chase, Barclays and the Royal Bank of Scotland agreed to parent-level guilty pleas to felony charges arising from manipulation of the foreign-exchange market.
Collectively, the banks agreed to pay more than US$2.5 billion in criminal fines.
These were not minor regulatory breaches. They involved criminal admissions by major banking institutions.
Yet none of the banks was closed. They were penalised, required to change their conduct, and allowed to continue operating.
The same pattern held for LIBOR benchmark manipulation and for banks found to have enabled large-scale money laundering across the world's biggest financial institutions: fines, monitoring and reform followed, not closure.
The broader point is important: serious institutional misconduct does not automatically require destruction of the institution itself. Regulators have repeatedly distinguished between punishing wrongdoing and preserving viable banking operations.
2. Financial Failure - Rescue, Restructuring and Preservation
Financial distress raises a different issue from misconduct.
When a bank is in serious financial difficulty, regulators generally have a range of options available before permanent closure is considered.
Northern Rock
Northern Rock's crisis in 2007 arose largely from its heavy dependence on short-term wholesale funding, which became unavailable when credit markets froze.
The response was not immediate closure.
The Bank of England provided emergency liquidity support, while the Government subsequently guaranteed deposits. Northern Rock was eventually taken into public ownership, restructured, and its assets managed over time.
Depositors were protected while the institution was stabilised and reorganised.
Royal Bank of Scotland
The scale of the intervention in RBS during the 2008 financial crisis was much larger.
The UK Government injected substantial capital into the bank and ultimately became its majority shareholder, owning around 84% at the peak of public ownership.
RBS was not closed.
It was recapitalised, restructured, placed under new management and allowed to continue operating as a major banking institution.
Barings Bank
Barings presents a different example.
The bank failed in 1995 after unauthorised derivatives trading by a single trader produced losses that Barings could not absorb. Subsequent investigations identified serious weaknesses in internal controls and management supervision.
Barings itself did not survive as an independent institution. However, its viable operations were acquired by ING and continued under new ownership rather than being subjected to a prolonged worldwide liquidation.
These cases are not identical to BCCI, and they should not be treated as though they were.
HSBC and the foreign-exchange cases involved misconduct. Northern Rock and RBS involved financial distress. Barings involved catastrophic trading losses and control failures.
What they demonstrate collectively is the range of regulatory tools available when a major bank gets into serious difficulty:
- emergency liquidity
- recapitalisation
- guarantees
- restructuring
- management replacement
- merger or acquisition
- public ownership
- separation of viable and impaired assets
- orderly resolution
Full and abrupt closure has generally been treated as a last resort rather than the automatic response.
The Pattern Repeats - Across Decades
The examples above are not isolated. The same choice - rescue and preserve, rather than close - recurs throughout modern banking history, on both sides of the Atlantic and right up to the present day.
Johnson Matthey Bankers (1984) was rescued directly by the Bank of England — the very same regulator that, seven years later, chose coordinated closure over rescue for BCCI. When JMB's bad debts threatened the London gold market and wider financial stability, the Bank of England organised a takeover over a single weekend rather than allow the bank to fail. The precedent, and the institutional will to use it, already existed before BCCI's crisis began.
Continental Illinois (1984) is the case that gave the world the phrase "too big to fail." When one of America's ten largest banks was hit by a depositor run following bad energy-sector loans, the FDIC and US government injected capital and took an equity stake to keep it operating, rather than allow it to collapse. The rescue playbook was public, tested, and internationally known seven years before regulators closed BCCI instead of using it.
Bank of New England (1991) failed in the very same year as BCCI - but was handled very differently. Rather than an abrupt worldwide shutdown, the FDIC placed the bank into an orderly bridge-bank resolution, fully protecting insured depositors while the failure was worked through in a controlled and transparent way.
Fannie Mae and Freddie Mac (2008) suffered losses running into the hundreds of billions of dollars during the financial crisis - among the largest failures in financial history. Rather than liquidation, the US government placed both into conservatorship, keeping them operating under government control while their positions were unwound over time.
Credit Suisse (2023) shows the same instinct persisting into the present. Rather than being allowed to collapse or enter liquidation, Switzerland's second-largest bank was pushed into an emergency, government-brokered merger with UBS, preserving its operations, staff and customers under new ownership.
Silicon Valley Bank UK (2023) was resolved within a single weekend: its UK arm was sold to HSBC for a nominal sum, keeping the business, its depositors and its staff intact rather than winding the entity down.
Each of these cases is examined in more detail in its own case study, accessible from the side menu. Taken together, they show that preserving a troubled bank rather than closing it outright has never been an isolated regulatory instinct confined to one decade or one country. It is, overwhelmingly, the default response - in 1984, in 1991, in 2008, and again in 2023.
So What About BCCI's Own Restructuring?
This is where the comparison becomes particularly important.
By 1990-91, Abu Dhabi had become BCCI's majority shareholder and a major restructuring and recapitalisation programme was already under way.
The programme included:
- substantial new financial support
- replacement of senior management
- branch rationalisation
- significant staff reductions
- identification and separation of impaired assets
- relocation of Central Office functions from London to Abu Dhabi
- restructuring BCCI into separately capitalised and regulated banks in London, Abu Dhabi and Hong Kong
The plan had been developed with Price Waterhouse and discussed with BCCI's supervisory authorities.
In other words, BCCI was not asking regulators to devise a rescue from scratch. A funded restructuring programme was already in progress, backed by its majority shareholder and supported by substantial financial commitments - the same shareholder that remitted a further US$650 million into the bank the day before it was closed.
Instead of allowing that restructuring programme further time to proceed, regulators led by the Bank of England moved towards coordinated closure, and BCCI was shut down on 5 July 1991.
The central comparison is therefore not whether BCCI was identical to Johnson Matthey Bankers, Continental Illinois, Bank of New England, Northern Rock, RBS, Fannie Mae and Freddie Mac, Credit Suisse, Silicon Valley Bank UK, HSBC or Barings.
It was not.
The question is whether BCCI was given the same kind of opportunity to restructure, recapitalise, separate viable operations from problem assets and survive under stronger supervision that regulators have allowed - repeatedly, across four decades - in other major banking crises.
A Bank With Different Origins
BCCI was also unusual among major international banks.
Its capital, leadership, ownership relationships and much of its business were rooted in the developing world, rather than in the traditional financial centres of Europe or North America.
It built a significant international network across Asia, the Middle East, Africa and other emerging markets, and served many customers and businesses that had limited access to established Western banking institutions.
That raises another legitimate historical question:
Did BCCI's origins influence how quickly and how harshly the international regulatory system responded to its problems?
There is no need to assume a discriminatory motive in order to ask this question.
It is enough to compare the options that were available, the treatment given to other major institutions, and the speed with which BCCI's restructuring was brought to an end.
Compensation for BCCI's Victims
The question of equal treatment also arose over compensation.
In Parliament, Keith Vaz MP directly compared BCCI with Barlow Clowes, whose collapse had led to findings of regulatory maladministration.
The UK Government ultimately made substantial ex gratia compensation payments to Barlow Clowes investors, with smaller investors eligible to recover up to 90% of their losses.
BCCI depositors, creditors and other victims received no comparable compensation from the UK Government, despite the Bingham Report identifying serious errors of judgment in the Bank of England's supervision of BCCI.
The two cases were not identical.
But the comparison raises an obvious question:
Why was discretionary public compensation considered appropriate for victims of regulatory failure in one case, but not in the other?
A Wider Historical Question
None of these comparisons suggests that BCCI should have received special treatment.
The underlying principle is simpler: equal treatment, proportionality and consistency should apply across international banking supervision, regardless of where a bank's capital, leadership or customers originated.
BCCI undoubtedly had serious problems, and those responsible for wrongdoing should have been held accountable.
But accountability for individuals and preservation of viable banking operations are not mutually exclusive.
Other major institutions - from Johnson Matthey Bankers in 1984 to Silicon Valley Bank UK in 2023 - have been fined, prosecuted, recapitalised, restructured, nationalised, merged or transferred to new owners.
BCCI was closed while a funded restructuring programme was still available.
The question this section therefore asks is not whether BCCI was innocent of wrongdoing.
It is whether closure was proportionate, whether realistic alternatives were given sufficient consideration, and whether a comparable Western banking institution facing similar circumstances would have been treated in the same way.
The individual case studies in this section allow readers to examine that question in greater detail and reach their own conclusions.
The individual case studies can be accessed directly from the side menu:
- Northern Rock
- RBOS and HBOS
- Barings Bank
- Johnson Matthey Bankers
- Midland Bank
- Bank of New England
- Continental Illinois
- Fannie Mae and Freddie Mac
- Credit Suisse
- Silicon Valley Bank UK
- World’s Biggest Banks Enabled Money Laundering
- LIBOR Fixing
- Compensation of BCCI Victims
- Foreign Exchange Manipulation
Taken together, these cases provide a wider basis for examining whether BCCI was afforded the same degree of regulatory flexibility, opportunity for restructuring and preservation of viable operations that was available in other major banking crises and misconduct cases.
Also read:
- Double Standards: The Forced Closure of the BCCI Bank, which examines BCCI's treatment against subsequent banking scandals and regulatory responses.
- HSBC vs BCCI Hypocrisy at its Best
