Eight regulators sat on the College of Supervisors. BCCI had a presence in 73 countries.
The College was formed by central banks to give regulators a view of BCCI as a whole. Its membership only reflected where BCCI was registered and regulated in the West, not where most of its business and customers were. This page sets out who was on it, who was not, and what part it may have played when BCCI was closed on 5 July 1991.
At a glance
Who sat at the table
Five of the eight members were Western European. Two more, Hong Kong and the Cayman Islands, were British territories whose banking rules were influenced by British rules. The UAE was the only member from outside that select group.
Who was not at the table
BCCI was founded by a Pakistani banker, owned mainly by Middle East shareholders, and did much of its business in the Middle East and Gulf, South Asia and Africa. Those countries licensed and supervised BCCI locally, but had no seat in the College.
The College has never explained why these countries were not represented.
What the College could and could not do
The College improved the flow of information between regulators. It was a forum, not an authority.
BCCI's senior management and auditors attended part of each meeting. The auditors reported on the Group's overall position.
5 July 1991: how the closure was decided
The closure was not a College decision. It was led by the Bank of England. No vote was taken, and no member has the powers to have blocked it.
The US Position
According to the Lord Justice Bingham's Inquiry into the Supervision of BCCI by the Bank of England (the Bingham Report), Gerald Corrigan, President of the Federal Reserve Bank of New York, strongly opposed the proposal, for the BCCI restructuring. This view is likely to have had considerable influence because US authorities were conducting major investigations into BCCI and they had indicated their intention to take immediate action that would result in the earlier closure of BCCI.
Questions left open
The authorities that moved against BCCI shared a Western regulatory background. The shareholder government and the countries where BCCI had most of its customers were absent from the College or left out of the final decision. The record leaves these questions for readers and researchers:
Questions left open
The authorities that moved against BCCI shared a Western regulatory background. The shareholder government and the countries where BCCI had most of its customers were absent from the College or left out of the final decision. The record leaves these questions for readers and researchers:
- Why were Pakistan, Africa and the wider Middle East never represented in the College?
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Did the opposition of the Federal Reserve, a non-member observer, carry sufficient weight to displace the College’s original preference for consulting Abu Dhabi, particularly when it was BCCI’s majority shareholder, was providing substantial financial support, and its central bank would have supervised one of the proposed successor banks
- Had the College reflected BCCI's global presence, would the Abu Dhabi-backed restructuring have been given more time?
Sources
- GAO, International Banking: Strengthening the Framework for Supervising International Banks (1994) - College membership and joining dates
- BCCI Insights – Report of Lord Justice Bingham - UAE excluded from final talks; New York Fed
- Bank of England, Banking Act Report 1991/92 - how the closure was coordinated country by country
- Senate Kerry Report, ch. 12 "The Regulators" - College formed 1987, first meeting April 1988
- Federal Reserve press release, 29 July 1991 - Luxembourg and Cayman actions on 5 July