Keith Vaz MP, who has campaigned on behalf of Asian depositors and employees of the disgraced Bank of Credit and Commerce International, said yesterday: 'It's rather alarming that three banks used by the Asian community - BCCI, Mount Banking Corporation and Equatorial - should all have ended in this way.
'I've been contacted by many people who used Equatorial as a 'safe bet' following the closure of BCCI 18 months ago because they could not get finance from the high street banks.'
Equatorial is based in the City, with two other offices in north-west London and Manchester, employing a total of about 60 people. It has nearly 3,000 customers, many of them Gujeratis, and its last annual report, published in September 1991, put deposits at pounds 91m.
Equatorial's non-executive chairman is the respected establishment figure Sir Peter Graham OBE, former chairman both of the Crown Agents and of Standard Chartered Bank, and one-time member of the Bank of England's Board of Banking Supervision.
Sources put the collapse of Equatorial down to a combination of the recession, the damage to confidence caused by the BCCI and Mount Banking closures, banking difficulties in Kenya and dramatically increased rates of interest paid by the government of India, which sucked away some deposits.
The administrators of Equatorial, Gareth Hughes and Maggie Mills of the chartered accountants Ernst & Young, issued an up-beat statement yesterday saying that 'the draft unaudited balance sheet shows the company is still solvent on a balance sheet basis, and it is hoped that all creditors should be repaid in full.'
They said the bank's directors petitioned for administration because of the 'large provisions Equatorial Bank has raised against bad and doubtful debts, which resulted in prospective capital inadequacy for regulatory purposes, together with a loss of liquidity.' They anticipate putting a rescue scheme to creditors in the next few weeks. Equatorial's last published annual report said it had assets of pounds 40m and pounds 60m of advances and discounts.
Sir Peter Graham became chairman of Equatorial in 1989. There are no plans to replace him. During a distinguished banking career he was a member of the Board of Banking Supervision in 1986/7 and president of the Institute of Bankers in 1981/3.
The Bank of England said when it petitioned for the liquidation of Mount Banking last November that it 'was not alleging insolvency.' The court subsequently ordered Mount Banking to be put into administration. Administrators are optimistic about its prospects. It has deposits of pounds 140m and its licence has not been revoked.Reuse content