The government of Abu Dhabi, the main shareholder of the Bank of Credit and Commerce International, agreed yesterday to pay up to $2.2 billion to creditors of the collapsed bank rather than face legal claims that might not be resolved for years.
The proposed settlement, along with the bank's remaining assets, would give 250,000 BCCI creditors and depositors 30 to 40 cents for each dollar they were owed by the bank.
The deal covers claims of about $10 billion in 40 nations. In several other countries, including the United States, regulators have reached their own settlements with the liquidators representing BCCI.
The proposed settlement has been the subject of intricate negotiations for seven months between Abu Dhabi and the court-appointed liquidators for BCCI, led by Brian Smouha of Touche Ross in London.
"This is a peace treaty," Mr.Smouha said yesterday. "Together we can actually try to get something out of this and repair it."
The broad terms of the proposed settlement were previously announced. But the fact that both Abu Dhabi and the liquidators have initialed the pact indicates that the two sides strongly believe that the required 70 percent of the creditors will go along with the deal and that it will be approved by courts in London, Luxembourg and the Cayman Islands, which were BCCI's three principal operating centers.
Creditors' lawyers said the repayment of 30 to 40 cents on the dollar was probably the best that could be expected under the circumstances.
Without the money from Abu Dhabi, creditors were likely to receive just 10 cents on the dollar because of all the bad loans and fraud at BCCI, according to Touche Ross.
Creditors who agree to the settlement must waive their right to sue the bank or Abu Dhabi and its ruling family, which owns 77 percent of BCCI.
For its part, Abu Dhabi is waiving the right to pursue claims for repayment of money said to have been misappropriated by former BCCI employees.
The proposed settlement, however, does not resolve the continuing dispute over Abu Dhabi's role in the BCCI affair.
The bank was seized in July 1991, after BCCI's auditor, Price Waterhouse, submitted a confidential report to the Bank of England and other regulators concluding that the bank had been crippled by widespread fraud and that representatives of the majority shareholders appeared to have been involved.
Abu Dhabi's representatives have consistently denied any wrongdoing.