Question 6 is also worth 20 marks

Case Study: Resolution of the NBA & CCB Anguilla On April 22, 2016 pursuant to Section137(1)(a) of the Banking Act No. 6 of 2015 of the laws of Anguilla the ECCB appointed a receiver for National Bank of Anguilla (NBA) & Caribbean Commercial Bank (Anguilla) Limited (CCB). In August 2013 the Central Bank sent in a conservator for the two indigenous banks in Anguilla. They are, the NBA with assets at the time of about EC$1 billion, and CCB with assets of about EC$700 million. The explanation given by the Central Bank at the time was that the two banks were illiquid and there was a concern they might fail and that the depositors' funds would all be lost. At some point, it was suggested that there was a hole of some EC$600 million in NBA's assets. Additionally, of the EC$1 billion in loans, some 50% were non- performing. Question 5: How did the regulator resolve the banking crisis? [Hint!! Recall speech delivered by Governor Timothy Antoine. Be sure to include the main issue(s), the resolutions methods, their objectives, clearly identifying the Act which governed the resolution process. ] [20 marks] Question 6: Assuming the Bank Supervisors of the ECCB are of the view the CCB and NBA will fail again because of the impact of COVID-19, write a convincing note to the Governor of the Central Bank to convince him that Hypothetical Stress-Testing scenarios and specifically the balance sheet approach is one of the most useful risk management tools to identify impeding risk to the financial system