KINGSTOWN, St. Vincent, Feb. 6, IWN – The Financial Services Authority (FSA) on Wednesday said it took over management and control of the Building and Loan Association on Friday to protect the interest of stakeholders.
When the FSA assumed management and control of Building and Loan and its subsidiaries, the empowerment of the then board of directors and chief executive officer ceased immediately.
But the FSA, in a statement, said its take-over is not a permanent arrangement but did not give any timeframe for the completion of its work.
It reiterated its “appeal for calm and reasoned judgment on the part of all relevant parties at this time.”
“… reacting in panic to withdraw monies and close accounts is NOT helping the institution,” the statement further said.
The FSA sought to assure shareholders that it acts independent of the central government, adding that its approach to Building and Loan is “business as usual”.
“The objective of the FSA in assuming management and control of the Association is to safeguard the Association’s financial stability and future sustainable growth. The FSA is already working with the staff of the Association to stabilize and strengthen the organization,” the statement on Wednesday said.
The FSA’s action on Friday, pursuant to its regulatory powers enshrined in the Financial Services Authority Act 2011, came two weeks after a letter in a newspaper that raised concerns about the financial health of Building and Loan.
Reports suggest that the letter by Luke Browne, an economist at the Ministry of Finance, prompted depositors to withdraw their investments from Building and Loan.
Both Prime Minister and Minister of Finance Dr. Ralph Gonsalves, and Leader of the Opposition Arnhim Eustace have urged depositors not to withdraw their monies from Building and Loan, a point the FSA also made on Wednesday.
The FSA said its management of Building and Loan “is not a permanent arrangement.
“The FSA is working to meet its targets within the shortest possible time, although is prepared to remain in this capacity for as long as needed to ensure the intended results. It has to be pointed out that the FSA is exercising control and the management of the Association, but the Association ownership remains, and will remain, with its members,” the statement said.
The agency also pointed out that while it is a statutory body, “it is an independent agency governed by the Financial Services Authority Act 2011”.
It said a “special meeting of Building and Loan shareholders will be held “to address Shareholders’ concerns and to report to the membership the actions taken and being taken by the FSA”.
Browne, in his Jan. 18 letter in The Vincentian newspaper, had noted that Building and Loan did not have an annual meeting last year and did not submit audited financial statements.
And, the FSA said an annual meeting will be held “as soon as Audited Financial Statements are ready for presentation to the AGM” and that the dates for the special and annual meetings will be announced “in the near future”.
The FSA further said it is important to note that its approach to Building and Loan is “business as usual”.
“The Rules of the Association are to be followed; however, we are reviewing all policies and procedures in order to enhance the efficiency and effectiveness of the Associations’ operations aiming at achieving an overall betterment of the institution. All work and decisions by the FSA are being taken in a transparent manner and will be presented to Shareholders at the appropriate forum (AGM and/or Special Meeting),” the FSA said.
It further said the central government “has no access to funds of the Association to finance its operations or for any other purpose.
“On the contrary, the Central Government may be a valuable source of financial resources to the Association if needed.
“The FSA wishes to reiterate its appeal for calm and reasoned judgment on the part of all relevant parties at this time and to emphasize that reacting in panic to withdraw monies and close accounts is NOT helping the institution. On the contrary, the Association would be considerably weakened if funds were hastily withdrawn. It is in everyone’s interests to strengthen the Association and safeguard its future.
“In these circumstances, the Association needs the cooperation and support of all members, depositors and shareholders, and the FSA asks all parties to help us to help the Association. The FSA is only asking for patience and understanding throughout this process. We can more effectively do the job of stabilizing and strengthening the Association if at this time you all share with us our confidence in this long standing, iconic indigenous institution, and the process that has been undertaken to strengthen it and promote its future sustainability,” the FSA said.