Closed bank to start court fight

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The Independent Online
THE Shah family, owners of Mount Banking Corporation, are to launch a High Court fight against a Bank of England decision to close down their bank.

An important factor in the Bank of England decision to close Mount is understood to be an alleged connection with key figures in a Bombay stock market scandal, which has caused a political uproar in India.

Earlier this month provisional liquidators were appointed after the Bank of England closed Mount because it was unhappy about the way its operations were conducted.

Mount is the first bank to be closed by the Bank of England while still solvent. Philip Wallace of KPMG Peat Marwick, who is one of the provisional liquidators, said yesterday 'We would expect there to be substantial repayments to creditors. Whether it is all or not is too early to say.'

The Bank's detailed reasons for closing Mount Banking are contained in an affidavit which creditors have not yet been allowed to see. But it said it closed Mount on 'just and equitable ' grounds, which under the Banking Act refer to the way the bank is run rather than its solvency.

The bank's 3,000 depositors are believed to be mainly Kenyan Asians, of whom only about 50 are in the UK. It has assets of about pounds 200m and deposits of pounds 160m.