Gov’t to boost deposit insurance law after Bank of Asia fall
The government has announced plans to strengthen the Virgin Islands’ deposit insurance framework following the collapse of the Bank of Asia early last year.
The legislative amendments are expected to improve depositor protection and financial stability.
Delivering the Speech from the Throne at the opening of the Third Session of the Fifth House of Assembly, Governor Daniel Pruce said one of the major legislative priorities for 2026 would be changes to the Virgin Islands Deposit Insurance Act.
He told legislators that the proposed amendments would focus on reinforcing the institutional and financial capacity of the deposit insurance regime, particularly while the Deposit Insurance Fund remains in its early stages.
According to Pruce, the changes will include adding the Ministry of Finance to the board of the Deposit Insurance Corporation and clarifying the corporation’s authority to borrow funds from the government, subject to ministerial approval, specifically for deposit reimbursement or bank resolution purposes.
The amendments will also introduce formal rules governing borrowing arrangements, along with mandatory reporting requirements to both the Minister of Finance and the House of Assembly. In addition, the government plans to reinforce the Deposit Insurance Fund through specified government contributions, measures which the Governor said are intended to strengthen financial stability and enhance depositor confidence.
The Bank of Asia (BVI) Limited was placed into provisional liquidation in late May 2025 after regulators determined the institution was insolvent under existing legal and regulatory frameworks in the territory, and joint liquidators were later appointed to oversee an orderly wind-down of its operations under court supervision.
The Virgin Islands Deposit Insurance Corporation and the British Virgin Islands Financial Services Commission said they would begin disbursing insured deposits to eligible customers in accordance with the territory’s deposit insurance and insolvency laws.
The bank collapse drew intense public and political scrutiny, including debate over the treatment of larger deposits and the placement of public funds in the bank before its insolvency.
In his address, the Governor linked the planned amendments to broader goals of fiscal strength and sound governance under the National Sustainable Development Plan. The proposed changes, he said, form part of a wider legislative agenda focused on prudent public financial management and institutional clarity.
“Additional amendments aim to reinforce the Deposit Insurance Fund with specified Government contributions, which should improve financial stability and boost depositor confidence while the fund is still in its early stages,” the Governor stated.
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Where is the Bank of Asia report?
The peope of thr BVI want a full account of what transpired and the transactions that were still happening even after red flag and what was the rationale.
We are quiet, taken for granted but not clueless and stupid
Stop using fancy words to deflect from the root of the monetary information
Agreed, a full report into what happened at the Bank of Asia is needed, including why government invested $5M into an institution that was already showing major signs of financial distress. Hopefully, penalties will be applied against the bank’s directors for allowing it to collapse.
BUT, the VI Deposit Insurance Scheme would not have covered the vast majority of depositors into Bank of Asia, since most would have much larger balances than the covered amount; or would be companies; or would not be BVI residents.
I am very wary of allowing Government any involvement into the running of the scheme. The VIDIC Board should be independent and getting government involved risks them lending their funds to government (just like the SSB).
There is no need for VIDIC to have a borrowing power. The only other bank that is liable to collapse is National Bank – all others are well run and well-capitalized – but historic government interference at NBVI has left it weak and with a large book of bad debts. Since this is the “Government’s” bank, allowing VIDIC to borrow when NBVI fails would mean that the burden of bearing the loss moves from government (who created the mess in the first place) onto BVI depositors, who will get even lower returns on their savings as a result.
Think again!
This is what hurts me, Govt. borrowing money from CIBC, yet still squandered millions of my tax. dollars on a corruption bank. I still want to know who sign off on this, they ought to be held accountable
Me 2