The owners of BAI either made wrong investments or were guilty of embezzlement. On both counts, it would be outrageous that the government should reimburse the policyholders with taxpayers\u2019 money.<\/p>\n
Managing a small loans company in a Boston suburb in the early 1920s, Carlos Ponzi promised his depositors that he would pay interest at the rate of, yes, 30 per cent a month!<\/p>\n
His financial transactions went smoothly for three months as he was able to pay the high interest rates on outstanding deposits with the cash received from new depositors attracted by the proposed high rates of return. In the fourth month, however, the inflow of new money was not large enough to make the interest payments promised to the old borrowers. Ponzi did not follow the suggestions of his associates to run away with the money. Eventually he went to prison.<\/p>\n
The Super Cash Back Gold (SCBG) of the BAI Group carried a maximum interest rate of 12 per cent per annum. There is no comparison with the interest returns associated with a Ponzi arrangement. The policyholders of SCBG were regularly paid every month, every quarter or every year, and no one made any complaint about late payment.<\/p>\n
Contrary to a Ponzi scheme that falls outside the formal system, the SCBG has been operating in the official circuit. It was authorised by the regulator, and it has been in existence for many years. The money collected has been invested in assets. This is not so in a Ponzi case. The owners of BAI either made wrong investments or were guilty of embezzlement. On both counts, it would be outrageous that the government should reimburse the policyholders with taxpayers\u2019 money.<\/p>\n
What is true is that the State, through its economic and monetary policies, fosters a Ponzi economy. On the one hand, all successive governments have lacked the courage to seriously tackle the budget deficit, with the result that public sector debt stood at 62.9 per cent of gross domestic product (GDP) at the end of March 2015. On the other hand, a low interest rate environment is conducive to rising household and corporate indebtedness.<\/p>\n
It was only after his death that practicing financiers took an interest in Hyman Minsky\u2019s model of financial crisis. The American economist distinguished between three types of finance on the basis of the (in)ability of borrowers to service debt payments from operating income. A firm is in the hedge finance group if it is able to pay back both the interest owed and the principal due via normal cash flows. It is in the speculative finance group if it can pay only the interest expenses and needs to refinance the principal upon maturity or repay it with cash from new loans. A firm is in the Ponzi finance group when it must increase its indebtedness or sell some assets to pay interest on existing debt, the possibility of paying down the principal being nonexistent.<\/p>\n
This distinction can be applied to public finance. Ponzi finance occurs when there is a primary fiscal deficit, that is when public expenditure exclusive of interest payments is higher than total public revenue. Figures published by the Ministry of Finance show a primary balance deficit that will increase from 0.6 per cent of GDP in 2014 to 1.2 per cent in 2015\/16 and still be 0.6 per cent in 2016\/17. This means that the government\u2019s recurrent revenue will not be sufficient to pay the interest on its debt on a timely basis. Government will therefore have to borrow or to sell assets to get the necessary additional cash.<\/p>\n
The same is true of household indebtedness which is a product of inflation. When the rising cost of living pinches family budgets, the heads of households take risks to improve their incomes. Corporate indebtedness increases too when interest goes down, luring investors into more profitable business but actually into more risky undertakings. In the eighteenth century, the Dutch developed habits of speculation because of the fall in the interest rate to 3 per cent in Amsterdam.<\/p>\n
\u201cWhen a man\u2019s vision is fixed on one thing,\u201d said Carlos Ponzi, \u201che might as well be blind.\u201d Depositors concentrated on returns do not see risks. Likewise, a government obsessed by political mileage can blindly do whatever it takes.<\/p>\n
\u201cContrary to a Ponzi scheme that falls outside the formal system, the SCBG has been operating in the official circuit. It was authorised by the regulator, and it has been in existence for many years. The money collected has been invested in assets. This is not so in a Ponzi case. The owners of BAI either made wrong investments or were guilty of embezzlement. On both counts, it would be outrageous that the government should reimburse the policyholders with taxpayers\u2019 money. What is true is that the State, through its economic and monetary policies, fosters a Ponzi economy. On the one hand, all successive governments have lacked the courage to seriously tackle the budget deficit, with the result that public sector debt stood at 62.9 per cent of gross domestic product (GDP) at the end of March 2015. On the other hand, a low interest rate environment is conducive to rising household and corporate indebtedness\u2026\u201d<\/p>\n
* * *<\/p>\n
Dirigisme financier<\/strong><\/p>\n Si la Banque de Maurice parle d\u2019habitude de \u00ab market adjustment<\/em> \u00bb en mati\u00e8re de taux de change de la roupie, en revanche elle demeure dirigiste sur le plan de la d\u00e9faillance bancaire. La meilleure fa\u00e7on d\u2019assainir le secteur bancaire, c\u2019est de laisser le soin au march\u00e9 de faire dispara\u00eetre des banques insolvables. Dans le cas de la Delphis Bank, le gouverneur de la Banque centrale s\u2019est donn\u00e9 trois mois pour trouver des repreneurs. Mais \u00e0 l\u2019\u00e9gard de la Bramer Bank, le m\u00eame gouverneur \u00e9tait peu dispos\u00e9 \u00e0 concevoir un plan de sauvetage d\u2019urgence.<\/p>\n En l\u2019espace d\u2019une semaine, cette banque priv\u00e9e est devenue un \u00e9tablissement appartenant enti\u00e8rement \u00e0 l\u2019Etat sous le nom de National Commercial Bank (NCB). En agissant dans la pr\u00e9cipitation sans faire une analyse avantages-co\u00fbts, on a oubli\u00e9 que la nationalisation pure et simple n\u2019est pas la seule voie dans le dispositif d\u2019interventions \u00e9tatiques, d\u2019autant que le probl\u00e8me est une question de liquidit\u00e9, et non de solvabilit\u00e9. Il est sans doute plus facile de nationaliser une petite banque locale insuffisamment diversifi\u00e9e qu\u2019un grand groupe bancaire ayant une large assise dans toute l\u2019\u00e9conomie. Reste que la rapidit\u00e9 de l\u2019action des autorit\u00e9s surprend du point de vue d\u2019un investisseur.<\/p>\n Ainsi, comment une banque centrale peut-elle accorder une nouvelle licence \u00e0 une banque d\u00e9faillante sans que soit effectu\u00e9 un examen minutieux (\u00ab due diligence \u00bb) de tous ses actifs et passifs ? D\u2019ailleurs, l\u2019implication de la State Bank of Mauritius dans une tentative avort\u00e9e de reprendre la Bramer Bank est une faute grave, mettant en cause l\u2019ind\u00e9pendance de la direction et du conseil d\u2019administration de la SBM vis-\u00e0-vis du pouvoir politique. Autre question : comment se fait-il qu\u2019un capital additionnel de seulement Rs 200 millions aura suffi pour qu\u2019op\u00e8re la NCB sans avoir \u00e9pur\u00e9 les actifs l\u00e9gu\u00e9s par l\u2019ex-Bramer Bank ? Dans de telles conditions, des banques priv\u00e9es auraient pu y montrer un int\u00e9r\u00eat afin de renforcer leurs parts de march\u00e9.<\/p>\n Car tout indique que l\u2019ex-Bramer Bank \u00e9tait solvable. Le Financial Stability Report de f\u00e9vrier 2015, publi\u00e9 par la Banque de Maurice, ne laissait entrevoir aucun probl\u00e8me de solvabilit\u00e9 dans notre secteur bancaire, m\u00eame s\u2019il pr\u00e9cisait que \u00ab differences remained among banks in terms of their individual capital adequacy ratio \u00bb.<\/em> Dans l\u2019ensemble, les ratios r\u00e9glementaires de solvabilit\u00e9, tel le ratio de fonds propres de base sur risques pond\u00e9r\u00e9s, pr\u00e9sentaient \u00e0 fin septembre 2014 des valeurs sup\u00e9rieures aux minima requis<\/p>\n L\u2019ex-Bramer Bank avait, en fait, un probl\u00e8me de liquidit\u00e9. Comme l\u2019a confirm\u00e9 le ministre des Services financiers au Parlement le 28 avril dernier, 125 retraits totalisant Rs 4,4 milliards furent effectu\u00e9s durant les trois premiers mois de l\u2019ann\u00e9e. La d\u00e9funte banque fut somm\u00e9e d\u2019injecter des capitaux frais de Rs 350 millions au 31 mars, et \u00e0 hauteur de Rs 3,5 milliards au 31 d\u00e9cembre 2015.<\/p>\n On dispose d\u2019une large panoplie d\u2019instruments qui s\u2019adressent \u00e0 des banques en crise de liquidit\u00e9 mais non insolvables. Face \u00e0 la panique bancaire de 2008-2009, la Grande Bretagne mit en oeuvre des apports de liquidit\u00e9, des refinancements bancaires et des recapitalisations. En g\u00e9n\u00e9ral, les sauvetages les plus significatifs, \u00e0 part l\u2019ultime recours qu\u2019est la nationalisation, sont une injection de capital, une assurance des actifs, des achats d\u2019actifs et une garantie des dettes. Rien n\u2019interdit au Tr\u00e9sor public de garantir des dettes obligataires \u00e9mises par une banque pour consolider son passif.<\/p>\n Dans le cas de la Bramer Bank, il n\u2019est pas logique de fermer une banque pour ensuite d\u00e9clarer publiquement que l\u2019Etat garantit tous ses d\u00e9p\u00f4ts. Une telle garantie aurait pu \u00eatre apport\u00e9e \u00e0 la banque pour la sauver ! L\u2019impact sur la dette du secteur public aurait \u00e9t\u00e9 le m\u00eame. Celle-ci, ayant augment\u00e9 de Rs 22 milliards entre mars 2014 et mars 2015, devra bien comptabiliser les Rs 10 milliards de d\u00e9p\u00f4ts de la NCB !<\/p>\n Tout compte fait, le gouvernement a accru le risque moral fond\u00e9 sur la croyance que les \u00e9pargnants sont \u00e0 l\u2019abri d\u2019une d\u00e9faillance bancaire. De plus, il a cr\u00e9\u00e9 des distorsions du co\u00fbt du capital dans le secteur bancaire, et introduit des conditions in\u00e9gales de concurrence. Tels sont les effets n\u00e9fastes du dirigisme financier.<\/p>\n Eric Ng Ping Cheun est auteur de ‘Robinson sur l’\u00eele durable’ (2013), en vente chez Bookcourt, Editions Le Printemps, Librairie Le Cygne, Le Bookstore et Jumbo Score<\/em><\/p>\n <\/p>\n * Published in print edition on 8 May \u00a02015<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" The owners of BAI either made wrong investments or were guilty of embezzlement. On both counts, it would be outrageous that the government should reimburse the policyholders with taxpayers\u2019 money. 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