Bank of America had been a founding shareholder in BCCI when the Bank was established in 1972, initially subscribing for 25 per cent of its capital. Its interest subsequently increased to approximately 30 per cent. The participation of one of the world's major international banks gave the newly established BCCI additional institutional standing during its formative years.
By the latter part of the 1970s, however, the relationship between the two banks had changed. BCCI had developed an increasingly extensive international network and no longer depended upon its original relationship with Bank of America. At the same time, Bank of America was seeking to expand its own direct presence in the Middle East, while BCCI's activities were also extending into markets in which Bank of America had existing interests. United States banking regulations also affected BCCI's ability to pursue expansion in the United States while Bank of America remained a substantial shareholder.
Bank of America therefore progressively reduced its interest, initially by allowing its percentage shareholding to decline through subsequent capital increases and later by disposing of its remaining shares. On 1 September 1978, Bank of America issued a press release concerning its relationship with BCCI and the disposal of its shareholding.
An understanding had existed with Agha Hasan Abedi that the Bank of America shares would ultimately be acquired and held for the benefit of BCCI employees. The acquisition was reportedly financed through International Credit and Investment Company (Overseas) Limited - ICIC Overseas, and the shares were subsequently transferred to staff-benefit bodies, including the ICIC Staff Benefit Trust and ICIC Staff Benefit Fund.
The Staff Benefit Trust was constituted as a discretionary trust for the benefit of employees and former employees of the BCCI Group and their dependants. Although some of those involved in its governance were senior BCCI executives, the Trust and Staff Benefit Fund were legally separate from the ICIC trading and investment companies. This distinction became important because later investigations made serious allegations concerning the activities of certain ICIC companies; those allegations should not automatically be attributed to every trust, fund or institution carrying the ICIC name.
The 1978 divestment therefore represented more than the withdrawal of an original institutional shareholder. It marked a change in BCCI's ownership structure and contributed to the emergence of staff-benefit organisations as significant holders of BCCI shares, alongside its predominantly Middle Eastern shareholder base.
For further details on BCCI's ownership structure, the Bank of America investment and subsequent changes in shareholding, see Shareholding.
