Central Bank says DBS not bankrupt


02-September-2011

This relates to rumours that the Development Bank of Seychelles (DBS) is bankrupt.
“CBS would like to state that the institution is a solvent entity and in fact has a capital adequacy ratio which is well above the minimum required,” the CBS said in a statement yesterday.

“An entity is only deemed insolvent when it is unable to service its debt and meet its other obligations, especially in the long-term. This is not the case with DBS,” the CBS statement said.

Noting that clients have experienced difficulty in getting disbursement for loans, the statement said this is due to the fact that the bank has been inundated with request since the interest rates on its loans was lowered significantly compared to that of commercial banks.

“As such DBS is having difficulties in meeting this demand. This does not mean that the bank is bankrupt but rather that it is encountering a funding issue. To that end the institution has raised funds by issuing bonds which have been fully subscribed to by banks and the public in general on several occasions. Nonetheless, this has been insufficient to meet the demand for loans because despite raising funds through those bonds, there have been yet more demand for loans,” the statement noted.

“We would like to remind the public that CBS has in place a supervisory system to continuously monitor the financial health of the institutions under its purview. These include continuous offsite and periodical onsite examinations of these institutions. Through these examinations CBS ensures that all financial institutions and others that it regulates, such as the DBS, operate in a safe and sound manner,” added the CBS statement.

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