Bramer Bank reopened ahead of planned State takeover

What you need to know:

Bramer Bank will be replaced by a new State-owned entity called the National Commercial Bank
Finance minister told Parliament NCB, to be licensed “by the end of the week”, will offer full services.
One of Britam’s largest shareholders is related to BAI and there are “common directorships between Britam, BAI and Bramer Bank”

A Mauritius bank briefly shut by authorities last week after evidence emerged of a massive Ponzi scheme is bank in business and set to go under government control this week.

According to reports in local media, regulatory authorities have reopened the bank and set up crisis desks Monday to deal with the “unprecedented financial scandal”.

Bramer Bank, associated with Britam director Dawood Rawat, will be replaced by a new State-owned entity called the National Commercial Bank (NCB) Finance minister Vishnu Lutchmeenaraidoo told Parliament Monday.

The new bank, to be licensed “by the end of the week” will offer full banking services.

Bramer Bank is currently open under temporary authorization from the Bank of Mauritius, which had considered taking over its assets. All 20 branches are open and ATM machines have been reactivated leading to a rash of withdrawals and stockouts.

Bank of Mauritius revoked Bramer Bank Corporation’s licence on April 3 after a liquidity crisis was determined to be partly the result of a Ponzi scheme. The Mauritian central bank had been providing the bank with overnight lending every day for a month to deal with the crisis.

The Mauritius Financial Services Commission also put related insurance company British-American Investments (BAI) Co (Mtius) Ltd under the control of PricewaterhouseCoopers (PwC) receiver-managers.

Prime Minister Anerood Jugnauth said the Ponzi scheme had affected 23,000 victims and could affect as many as 160,000 BAI insurance policy holders.

The scandal has sent ripples all the way to Kenya due to the relationship between some of its directors and the British-American Investments Co (Kenya) Ltd (Britam).

One of Britam’s largest shareholders, British-American (Kenya) Holdings is related to BAI and there are “common directorships between Britam, BAI and Bramer Bank”, including Mr Rawat and two relatives. Britam has, however, clarified it has no financial exposure to the crisis in Mauritius.

The bank’s closure follows the suspension last week of another Mauritius-based entity tied to Belvedere, an alleged Ponzi scheme operator.

These developments are seen to pose a threat to Mauritius’ future as a financial haven.