Importance of Financial Compliance in Antigua and Barbuda Highlighted in New Report

December 7, 2004

Financial Stability at Risk: A Major Concern in Antigua and Barbuda

A recent assessment has underscored the significance of financial compliance in Antigua and Barbuda, a small island nation with a substantial offshore banking sector. The report highlights the need for robust regulatory oversight and compliance measures to mitigate risks and maintain financial stability.

Concentration within the Banking Sector: A Major Concern

The largest bank accounts for 61 percent of the sector’s total assets, indicating a high degree of risk.
This concentration poses significant challenges for the country’s banking system, including:
- Systemic Risk: A major default by the largest bank could have far-reaching consequences for the entire financial system.
- Liquidity Risk: The dependence on one institution for liquidity could lead to difficulties in meeting short-term obligations.

Investment and Loan Portfolios: Significant Risks

Investment portfolios make up the bulk of banks’ assets, comprising government and corporate bonds and equities.
However, loan portfolios also pose significant risks, with some loans exceeding 25 percent of capital and/or being connected to other parties within the banking group.

Recommendations for Improvement

The report emphasizes the need for:

Robust Regulatory Oversight: Strengthening the country’s banking supervision framework to ensure effective risk management and sound banking practices.
Compliance Measures: Implementing robust compliance measures to mitigate risks and maintain financial stability in Antigua and Barbuda.

Accessing the Full Report

The full report, available for free download, provides a detailed assessment of Antigua and Barbuda’s compliance with the Basel Core Principles. It offers valuable insights into the country’s financial sector and highlights areas where improvement is needed to maintain confidence in the island nation’s offshore banking industry.