FSA defends BLA recapitalization plan
- “All we can say to you tonight is, finally, really and truly, it’s your call.” — FSA’s Bollers
- “Do you want us to literally have to take a decision to close the door tomorrow? Because we are prepared to do that…” — FSA’s Bollers
The Financial Services Authority (FSA) had to defend the recapitalization plan for the Building & Loan Association (BLA) that it asked members to approve on Thursday or have the building society liquidated.
The recapitalization plan, which was approved after intense debate, will see each member of the BLA required to hold at least 100 shares, valued at EC$10 each.
To reach that minimum, members have the option of converting other instruments they hold at the BLA or investing additional cash.(IWN will bring you the full details of the recapitalisation plan after verifying some figures)
Executive Director of the FSA, Sharda Bollers, responding to criticism from the floor, told the meeting, the first “annual” general meeting of the BLA in two year, that the plan was the best option.
“We have looked at a multitude of options with respect to this recapitalisation plan,” she said, as she sought to convince members that the plan was arrived at after careful consideration of the options.
“Members, you have to be aware of one important vital fact at this moment. You have the eyes of the actual international community; you have the eyes of the regional community on the Building & Loan Association,” she said of the beleaguered institution.
The was a run on the BLA — with EC$9 million withdrawn in about two weeks after a letter in a news paper raised question about the financial health and management of the 72-year-old building society.
The letter was written by politician Luke Browne, an economist then employed at the Ministry of Finance.
Bollers told Thursday’s meeting that they have “an opportunity to make history here.
“You have an association that was dying, that was dead, in January. The FSA propped up that association. So you had a patient, as it is being described, it is actually being looked at as a patient who was put on ICU (intensive care unit) for the last few months and is now in the ward again. And that patient really and truly is surviving and is recovering but we can’t proceed to get that patient riding a bicycle yet. We are moving in a certain direction.
“So, the recapitalisation plan which we have presented before you, it is not a product of overnight work. It is a product of extensive work and resources that have been drawn from multilateral organisations and from experts,” she said.
Bollers responded to accusation from the floor that the FSA was not listening to the suggestion of BLA members.
“I wish you would also listen to us with an open mind and an open ear, because we have come to this point where we have told you it is two options…” she said.
The option, Bollers said, was the continued existence of the BLA — a situation in which members would get all their money back but it would take longer to do so.
“… with respect to liquidation, the fact of the matter is you get a percentage of your money,” she said, adding that this would be the case because of liquidators’ cost.
The primary objectives of FSA, Bollers reiterated, is to protect the funds of members.
“All we can say to you tonight is, finally, really and truly, it’s your call,” Bollers said.
She said that the Eastern Caribbean Bank has given “tremendous support” and multilateral organisations are finding that there has been “remarkable progress”.
“You have seen for yourself the figures which we have presented,” Bollers further said in reference to the update on the financial situation at the BLA.
“So, we are heading in a certain direction and as hard as it is, this is members association; the FSA is not here to create any financial hardship on persons. Our objective is to ease hardship,” she said.
She noted members expressed fear of a repeat of the meltdown of failed insurance magnates BIACO and CLICO.
“The difference here is that you have a regulator who has acted swiftly, decisively, gone in and made certain corrective actions. We have gone in early enough to do what we are doing. So, it is not a situation where we’ve wanted to control, to manipulate, not wanting to listen to you, but is really effectively saying it is a matter of us having to address fundamental core problems, massive problem,” Bollers said.
“So, you have before you, members, a very important decision to take. I am not just saying this to you to put any pressure on you,” she said as she restated the point that the regional and international community was paying attention to what is happening at the BLA.
“Do you want us to literally have to take a decision to close the door tomorrow? Because we are prepared to do that if you don’t proceed to give us some support for the recapitalisation plan. It’s as simple as that,” Bollers further said.
“We’ve come this distance, we’ve tried to engage you as much as possible, we’ve had a series of interaction, including two town hall meetings, but yet we have here tonight a lot of people saying that we are disrespecting members, a lot of persons saying that we are not listening.
“We have been listening and because of what we have been listening to, we’ve tried as hard as possible to compromise and come up the most reasonable plan we can in the circumstances,” he said.