Following the closure of BCCI on 5 July 1991, sustained pressure from depositors, creditors and former employees, together with questions raised in Parliament by Keith Vaz MP in particular, led to demands for an independent examination of the circumstances surrounding the Bank’s supervision and closure. The Government subsequently appointed Lord Justice Bingham to conduct an inquiry into the supervision of BCCI under the Banking Acts and to consider whether the actions taken by the United Kingdom authorities had been appropriate and timely. The Inquiry culminated in the publication of Inquiry into the Supervision of the Bank of Credit and Commerce International in October 1992.
The Bingham Report examined a wide range of issues relating to BCCI's supervision and the actions of the Bank of England before the Bank's closure. In carrying out his inquiry, Lord Justice Bingham was given access to confidential documents and records held by the Bank of England, together with evidence from current and former officials and other relevant parties.
At the time, BCCI was subject to consolidated international supervision through the College of Regulators, led principally by the Bank of England and the Luxembourg Monetary Institute (formerly the Luxembourg Monetary Authority), together with the central banks or supervisory authorities of Spain, Switzerland and the United Arab Emirates. These authorities shared responsibility for the supervision of BCCI's international operations.
It should be noted, however, that the scope of the Bingham Inquiry was limited. Lord Justice Bingham was asked to examine the discharge of the Bank of England's supervisory responsibilities in relation to BCCI and whether those responsibilities had been exercised appropriately. The Inquiry was not established to determine whether the decision to close BCCI was justified, whether alternative regulatory options existed, whether BCCI was in fact insolvent, or whether the restructuring and recapitalisation proposals supported by the Abu Dhabi majority shareholders could have enabled the Bank to continue operating.
Lord Justice Bingham concluded that the Bank of England had made errors of judgment in its supervision of BCCI but rejected allegations of bad faith or deliberate misconduct. The Report therefore focused primarily on supervisory shortcomings rather than the wider circumstances surrounding BCCI's closure or the commercial, political and regulatory considerations that may have influenced the decision to bring the Bank's operations to an end.
Accordingly, while the Bingham Report remains one of the most important official documents concerning BCCI, it should be read in the context of its defined terms of reference. It was an inquiry into the supervisory responsibilities of the Bank of England, not a comprehensive examination of all the circumstances leading to the closure of BCCI or the merits of the closure itself.
