How much is left at Stanford International Bank?

March 3, 2009

Now that the initial storm has passed over the demise of Stanford International Bank (SIB), the question I get the most from readers , friends and yes, family, is how much will people will be able to recover from the bank once the dust settles and the assets can be compared to the liabilities?

First of all, you should read Alex’s post on Stanford versus Stanford, so that you have clear that the problem is with the depositors of Stanford International Bank and not with Stanford Group, Stanford Advisers and/or Stanford Asesores. The former is a bank that issued CD’s and opened accounts in Antigua, the latter is a network of advisors who opened accounts for clients as brokers, not as banks, even if these advisors would also sell their cleints CD’s at SIB.

The answer is that I don’t know how much people will be able to recover from deposits at SIB, but I am not too hopeful. Let’s see why:

Stanford used to tell people that it gave no loans, other than those 80-100% guaranteed by cash deposits and that it invested its portfolio in a variety of instruments. In the Dec. 2007 financial statement, SIB had assets of US$ 7.05 billion and deposits (the infamous CD’s and others) of US$  6.89 billion. In the same report, it claimed to have Cash and equivalents of roughly US$ 627 million and investments of US$ 6.347 billion, distributed like the following pie chart:

portfolio

This portfolio was claimed to be at “fair market value” implying that it is mostly in liquid instruments traded in the market sufficiently often for you to obtain a price for it.

The first warning one gets, is that the receiver has only managed to find US$ 250 million in assets. That is bad, but the whole thing simply collapses when you learn that the Chief Investment Officer for SIB claimed to the SEC, that the investment portfolio had the following assets (using December’s numbers for the amount of dollars):

Tier I (Cash and cash equivalents)                            10%~US$ 800 million

Tier II (Portfolio run by others)                                   9%~US$ 765 million

Tier III ( Assets managed by Stanford Group)       81%~US$ 6.88 billion

The problem is that in the same testimony, the Chief Investment Officer says that those US$ 765 million have become in fact US$ 360 million, because oops, she lost over half of what she managed since April of last year and the US$ 6.88 billion included “over US$ 3 billion in real state and a US$ 1.6 billion loan” to none other than Allen Stanford. And then there is some private equity investments.

But remember that they claimed not give out loans unless it is collateralized, unless I guess you are the owner and order it. Thus, you can see the problem, there is no correspondence between the “investment portfolio” advertised by Stanford and reported in its financials and what the Chief investment officer claimed to know about to the SEC. (And she was charged with obstruction of justice anyway)

In fact, the infamous capital infusion by the “shareholders” (Stanford) of US$ 541, turned out to be not only not in cash, but in real estate for which Stanford had paid US$ 88.5 million. All smoke and mirrors!

Thus, you can see it is all a house of cards, a Ponzi scheme that collapsed and at this point all that the receiver has found is US$ 250 million in assets. (about 2.9% of deposits). As Alex notes, the sale of Stanford Group’s assets may not give much back to Antigua, so you may have some real estate, some private equity companies, some airplanes and that is that.

A true Ponzi scheme. People were paid with money from new depositors and I have little hope that a hidden account with investments will be found that could even double the 2.9% found so far. And least of all, you should not believe in the foolish Prime Ministers of Antigua and St. Vincent, each of which supposedy opened an account with US$ 8,000 at SIB to boost “consumer confidence” and rescue SIB. These guys appear to have no clue as to what 10^9 dollars really means…

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10 Responses to “How much is left at Stanford International Bank?”

  1. LostItAll Says:

    The AP did first report the PM’s investment in SIB. I did a douple take when I read it. They issued a correction the next day as BOA.

    The only point I want to make is, I was told by my Stanford Investor that Allen Stanford had $300mil of his personal money in SIB, then in December added another $550mil.

    We all know this is total BS now. So, I suspect the $1.6bn loan he took was really just a journal entry to make up for $1.6bn in missing funds.
    The $8 or $9.2bn at the bank could easily just be made up numbers to bring in bigger and bigger fools like me. I incorrectly thought my money was a rounding error to the total money the bank reported they had.

    Never suspected in was all made up horseshit to begin with.

  2. JBantigua Says:

    I have lived here long enough to stop asking “why”. The traffic laws are not even enforced down here much less any financial regulations.

    I believe Stanford has been charged in the US by the SEC. He has not been charged with anything in Antigua.

    You can also say that the SEC is resonsible for the Madoff scheme as they had been notified for more than 10 years that he was up to something. What did the SEC do? Absolutely NOTHING! So while there is not any regulation in Antigua, The US regulations have not been enforced for DECADES and people have lost their life savings as a result. The whole US economy has been damaged as a direct result of US government intervention and lack f regulation enforcement.

  3. moctavio Says:

    I agree with William that the Prime Ministers are responsible in part, the supervision was in Antigua, not in the US, they obviously never asked SIB to show where the assets where. Why do you think Stanford has not been charged in the US? Because the crime was not committed in the US! In fact Pershing stopped transferring the funds to SIB when the regulators in Antigua told Pershing that they had never seen the assets in the portfolio. And three days before the SEC stepped in (Thursday February 12th.) the Antigua regulator said he was “comfortable” with SIB, he said exactly the opposite the next day. There was no regulation in Antigua, as simple as that. Without that, there would have been no fraud. And the two Prime Ministers looked the other way. If you don’t want to ask why, that is your problem. And I did link to Associated Press but questioned whether it was true or not, the point is Antigua offshore banking has been severely damaged because of the lax supervision.

  4. JBantigua Says:

    Ok, I know this because I live in Antigua and read the story in the local paper. The photo in the article was taken in front of the BOA where I happen to hold a couple of accounts.

    From the horses mouth…..

    http://www.antiguasun.com/paper/?as=view&sun=282341077803072009&an=375941037703042009&ac=Local&aop=285459038803042009

    It clearly states that the “foolish” Prime Ministers you refer to were depositing their money into the BOA( now the ECCB) to restore confidence in the bank. I am sure you have seen the photos with lines around the block containing people trying to withdraw their money from the Bank.

    William,

    The SIB is also under the jurisdiction of the SEC…..We all know they are incompetant fools (see Madoff) but I do not see you pointing any fingers at them? The SEC has endless funds to investigate people and firms but have done nothing for the past couple decades…..

    There have been only TWO Prime Ministers in Antigua over the past THREE decades….the second one has been on the job for 5 years now and had no part in the opening of SIB…..In fact he has had some heated battles with Stanford over the last couple years……

    Stop writing about stuff you do know fully understand!!!!!!

  5. JBantigua Says:

    m

  6. William Says:

    Morons were the Prime Ministers past and present that allowed this fraud to develop under their noses and now want to make amends with $8,000 dollars, they destroyed the industry in the process. Want to bet they benefitted at least 100 times from their lax supervision?

  7. moctavio Says:

    Give me a link, I havent been able to find anything but the article I quoted which says it was at SIB and as part of a “rescue” plan nobody has heard about. I found the report by Associated Press hard to believe that is why I said “supposedly”. And in any case, the news is cruel to Venezuelans who have billions at SIB and read that piece of news and think the bank may be rescued when in fact they have lost most of their money.

  8. JBantigua Says:

    Come on man……do a little research.

    The “Foolish” Prime Ministers you refer to deposited money at the former Bank of Antigua (now the ECCB) NOT the SIB.

    What a moron……

  9. Dessalines Says:

    “And least of all, you should not believe in the foolish Prime Ministers of Antigua and St. Vincent, each of which supposedy opened an account with US$ 8,000 at SIB to boost “consumer confidence” and rescue SIB. These guys appear to have no clue as to what 10^9 dollars really means…”

    The Prime ministers mentioned in your article deposited US$8000.00 at the Bank of Antigua which has been taken over and managed by the Eastern Caribbean Central Bank not at the Stanford International Bank as your article erroneously state. Bank of Antigua although owned by Stanford was regulated by the Eastern Caribbean Central Bank, which insures depositors funds and carry out inspections at least twice a year. (all banks in the OECS are subjected to an annual unannounced snap inspection by the Central Bank)

    Bank of Antigua or the Eastern Caribbean Amalgamated Financial Company as it is now called under the new ownership is now owned by the following shareholders.

    The Government of Antigua and Barbuda 25%
    Antigua Commercial Bank 15%
    National Bank of Dominica 15%
    Bank of St Lucia 15%
    Nat. Bank of St. Kitts Nevis Anguilla 15%
    St Vincent National Bank 15%

    Antiguan citizens are forbidden by law to open accounts or do any business with Stanford International Bank or any Antiguan registered offshore banks.

    In addition the Stanford International Bank is under receivorship and cannot accept deposits or make payouts of any kind to customers

    Dessalines

  10. anna Says:

    Thanks m for another good blog!


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