Customers enraged as Watani Bank declares bankruptcy [Archives:2005/901/Front Page]

December 8 2005

SANA'A, Dec. 7- The Watani Bank (WB) announced last Tuesday that it failed to meet its financial obligations to its customers as stipulated by the articles 43, 44 and 46 of the Law No. 38 issued in 1998 concerning banks and financial institutions.

Therefore, the Central Bank of Yemen (CBY) decided to take firm measures against the bankrupt bank as of last Wednesday and put an end to the authority of its board of directors and executive administration. Hundreds of angry customers gathered at the WB which was surrounded by a large number of security troops and police vehicles to avoid its being stormed.

Naji Bin Abdullah al-Ghader, Deputy Chairman of the Board of Directors at the WB said that he met the President of the Republic and urged him to give orders to the government to deliver the financial allocations of contractors who borrowed large amounts of money from the bank upon pledges that such loans will be paid back when they receive their allocations from the government.

A total of 6.612 billion Riyals is the debt on the government for the bank that said the amount would not suffice for paying back the deposits of customers, adding that it had other debts on traders and businessmen.

The Deputy Chairman of the Board of Directors at the WB denied that he withdrew a large sum of money from the bank to his personal account, as some rumors indicated. The WB started its work in Yemen on Dec. 31-1998 with a total capital of 7 billion and 968 million Riyals and in June-2005 its budget totaled 55 billion and 389 million Riyals.

In June 2005, deposits of customers and other banks in the WB totaled 22 billion and 604 million Riyals while debts on contractors do not exceed one third of the sum, contrary to WB announcement that unpaid debts resulted in its failure.

According to Al-Ghader, investments in the bank, including the treasury bonds reached 5 billion and 154 million Riyals, the paid capital is 2 billion and 517 million Riyals, the self-funding amount (assets of customers) reached 3 billion and 536 million Riyals.

Statistics released by the bank revealed that interests of the first half of the year amounted to 149 million Riyals, 34% is the liquidity rate at the bank, 8.93% is the bank's capital efficiency rate and 25% is its liquidity rate in the Central Bank of Yemen.

The WB is the first bank in Yemen to face firm measures and was shut down by the CBY and its board of directors faced condemnation. The closure of the WB for Trade and Investment raised concern among Yemeni citizens having deposits in other commercial banks, who tend to withdraw their money, fearing a similar situation to happen to their deposits.