ST GEORGE'S (CMC):

The Grenada government has shut down a local bank after a series of complaints from customers over its failure to honour requests for withdrawals.

Capital Bank International, a home-grown bank, was ordered to close after government obtained a court order transferring control of the bank to a receiver.

All 12 branches of Capital Bank throughout the tri-island state have been ordered shut and a government notice placed on their doors states that the decision is consistent with the Banking Act and Companies Act of Grenada.

The notice was signed by Minister of Finance and Prime Minister Dr Keith Mitchell.

"This order comes after the failure of Capital Bank in recent months to honour withdrawal requests by its customers, raising questions about the solvency of Capital Bank," said a statement from the government.

"The failure of the bank to honour withdrawal requests has resulted in at least one lawsuit being filed against the bank."

In an application to the court, Timothy Antoine, the permanent secretary in the Ministry of Finance, declared in his affidavit that the insurance policy of Capital Bank was cancelled for non-payment of the premium.

He also stated that the Ministry of Finance had received calls from many depositors expressing concerns about their inability to make withdrawals from the bank which began operations in 1997.

Strong security presence

Receiver David Holukoff walked into the bank's St George's headquarters late Friday in the presence of government officials and a contingent from the Financial Intelligence Unit of the Royal Grenada Police Force.

Holukoff is a chartered accountant and a certified fraud examiner, who has been working in the Eastern Caribbean on numerous complex offshore banking and financial institution matters.

Government said that based on legal advice, it was forced to safeguard the interests of depositors, and to "preserve confidence in the integrity of the banking system in Grenada".

Friday's closure is further bad news for Capital Bank, which has been seeking to end a long-standing dispute with the St Kitts-based Eastern Caribbean Central Bank (ECCB).

The bank was preparing to take its dispute with the ECCB over its access to clearing-house facilities for arbitration at the International Centre for Settlement of Investment Disputes in Washington.