Much has now been written about the Government’s ill-advised $5.0 million deposit into the troubled Bank of Asia. Finger pointing has gone on, no proper answers have been provided, and there have been calls for the Governor to now investigate.
But is the economic problem just one of $5.0 million? We have reasons to believe that the problem might be much bigger than that. We have attempted to do as much research on the financials of Bank of Asia as possible, but the information is admittedly incomplete. However, we believe that we have uncovered enough data to make some educated conclusions, or at the least paint a realistic scenario as to what might lie ahead.
This work is in no way an attempt to be alarmist but rather to help educate all of us, and the Government, of what might be possible. Our main motivation in preparing this work is to encourage the Government, the regulators, and the public to come together and support the prospects of a process to sell Bank of Asia and to take all reasonable steps to not allow it to fail.
In recent days we have seen an increasing level of support for a positive solution, and we encourage all to get behind it. If it is possible, and there is evidence to suggest that this might be the case if sufficient time is afforded, the reputational and economic benefits to the Territory will be overwhelming. As important, the alternative of a failed bank is very likely to prove catastrophic; not just for our financial services sector, but for the jurisdiction as a whole.
Bank of Asia’s Estimated Deposit Base
While we’ve been unable to ascertain the precise amount of customer deposits currently held at Bank of Asia, we understand that total deposits at the end of 2023 were about $45.0 million and that there had been a steady decline in the year prior. It is logical that this trend would have continued as the bank’s troubles became more widely known in private circles.
On this basis, it is quite sensible to believe that the current deposit figure is between $30.0 million and $35.0 million, with the Government owed $5.0 million (or about 15% of the total). For present purposes we assume a total deposit base of $32.5 million.
We understand that the bank has about 300 depositors, and of those depositors the top 10 have historically represented around 50% of the total deposits. However, with the Government’s large $5.0 million deposit, which was not represented in the historical figures, we assume that the top 10 depositors represent 55% of the total deposits now held by the bank.
A Major Creditor Tied to Bankrupt Carson Wen Was Lurking Before VIDIC Stepped In
We understand that the present common equity in the bank to be very negative. As we reported on 18 June 2025, there was a general bank creditor that was owed $15.0 million but had not been sending along the invoices. That creditor is linked to the bank’s bankrupt founder, Mr Carson Wen. We now believe that this figure may be up to US$20.0 million, and for present purposes we assume the figure to be $17.5 million.
If Mr Wen and his cronies were aware of some imminent action by VIDIC and/or the FSC, and they must have had some clue, they may well have rushed to take out the money and place it somewhere thought safe (wherever that might be) before it was frozen and the amount thereafter left subordinate to depositors. Someone in the Territory would have had to hit the Send button for Mr Wen no doubt. Was this the bankrupt Wen’s final act of thumbing his nose at the Territory before running off to hide? If so, and it is hardly a leap to believe this happened given Mr Wen’s and his friends’ past abhorrent behaviours, the bank would then have had to record a major loss upon payment and been short the estimated $17.5 million in cash. Based on some publicly available data, and adjusting for this event, we believethat the bank’s resulting common equity may now be an estimated, staggering negative $22.5 million. If this is right, there would be only $10.0 million of assets (likely mostly cash) to cover the estimated $32.5 million of deposits. A total loss of $22.5 million.
The Depositor Base and Its Concentration – the Insured and Uninsured
To help begin to complete the picture, we must then make educated assumptions as to the average account balances for the 300 depositors. We understand that Bank of Asia’s deposits have been skewed towards some relatively large amounts. If the top 10 depositors represent 55% of the deposit base (an average deposit of $1.8 million), we assume depositors #11 to #50 represent 15% of the deposit base, or about $5.0 million (an average of about $120k, with #50 having a balance of $100k). It would follow that the other 250 depositors all had account balances of less than $100k (a total of about $10.0 million) and should (at least in theory) be fully protected by deposit insurance.
If right, the following would be true: (1) the top 50 depositors would be entitled to a combined amount of insurance of $5.0million (50 accounts x $100,000 per depositor). The remaining 250 depositors would be entitled to a combined amount of insurance of $10.0 million, meaning estimated insured deposits would be $15.0 million and the estimated uninsured deposits would be $17.5 million.
Is VIDIC’s Insurance Fund Large Enough to Cover Insured Deposits? It Might Not Be.
We understand that VIDIC’s insurance fund’s balance may be only $3.0 million or even less. It has been publicly reported that the estimated annual premiums to be paid by the seven (7) banks are around $2.0 million in total, and the banks have only been paying premiums into the fund for a very short period of time.
If the figures above are broadly correct, not only will the uninsured deposits be totally wiped out (meaning the entire nearly $5.0 million of the Government), but VIDIC’s insurance fund might not even have enough money to entirely pay the insurance. In the estimates above, if there is only $10.0 million of cash to repay depositors, and if VIDIC has only collected what it estimated to be $2.0 million in premiums per year, it cannot.
The situation could be even worse for the Government, as it initially guaranteed $4.0 million before VIDIC began collecting premiums only last year. So not only could it be the case that VIDIC does not have enough money to pay out the insureds, the Government could be on the hook for some of the insurance. Even if the Government is not technically at risk because the guarantee is no longer in place, it would be fairly extraordinary in the circumstances for the Government to not step in regardless. Either way, losses greater than $5.0 million would result for the Territory.
The Potential Consequences May Be Much Worse Than Presently Considered
To sum this up, and we fully accept that these are educated assumptions based on the information we can piece together, the below helps illustrate the potential magnitude of a bank failure problem.
First, VIDIC may not even be in a position to directly cover the insured deposits given the very limited amount of premiums that it has collected.
Second, if VIDIC does not have enough money in its insurance fund, one way or another the Government is likely to incur the loss, whether through its original $4.0 million guarantee, if still in place, or simply because it would be extraordinary to be telling the public that there is $100,000 of insurance per depositor only for it to turn out to be untrue just one year after the scheme was put in place.
Third, aside from covering third-party insured deposits, the Government will have lost its entire $5.0 million deposit. Even if some of the above assumptions prove to be misguided, this outcome would appear quite likely in any case.
Fourth, uninsured depositors, some of which may be local residents but, in any case, many are likely to be BVI companies, would not receive a penny. The result of this would cause serious credibility issues to any investment, a deposit or otherwise, being placed in the Territory.
And fifth, if VIDIC is without any money, the advertised insurance on deposits at the other six (6) banks in the Territory would now effectively be worthless.
One does then does have to wonder about how depositors may react to learning this, particularly if there is any risk that any other bank at which deposits are held might be in trouble. We have seen reports that VIDIC and the FSC are monitoring another bank now. In other words, there is a real scenario of financial contagion, with the current problem infecting the broader financial system of the Territory. This cannot be tolerated.
Our Proposed Positive Solution
On 18 June 2025, we published an extensive piece arguing that the best solution for Bank of Asia is that it now properly explores a sale to a third party combined with a substantial capital injection. If successful, this would mean that no depositor would lose money, the Government would not lose additional money, and VIDIC’s fund would not lose money. A positive solution of epic proportions, for all of the reasons given in the 18 June 2025 article.
https://www.gbmediahouse.com/Articles/Article/3777/Bank-of-Asia-Can-It-Be-saved
As we know, and has been widely reported, credible buyers have been approaching the board of Bank of Asia, meaning Deon Vanterpool (nephew of the Honourable Lorna Smith), for many, many months, but the board entirely refused to engage and/or provide any information. The potential investors had little interest in the bank as it stands (and why would they?), but rather the strong interest lies in significant untapped potential that the bank holds and has always held. Importantly, the board lost its powers upon the provisional liquidators’ appointment. A watershed event given past dealings. Finally, a clean break and the potential for a new beginning.
It is now high time for the Government, the regulators, and all others affected by this matter to stand together to bring those potential investors or others back to the table. We call on everyone to make that happen.
Guavaberry Media continues to track Bank of Asia (BVI) developments.