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Pedestrians walk in front of the Building and Loan Association Building in Kingstown on Thursday, Feb. 7. Information is slowing emerging about the FSA’s decision to take over the institution.
Pedestrians walk in front of the Building and Loan Association Building in Kingstown on Thursday, Feb. 7. Information is slowing emerging about the FSA’s decision to take over the institution.

KINGSTOWN, St. Vincent, Feb. 7, IWN – Since 2009, different agencies examined the financial health of the St. Vincent Building and Loan Association (SVBLA) — years before a newspaper article in January triggered public concerns about its operations.

Leon Snagg, chair of the Financial Services Authority (FSA), said Thursday that the World Bank was among the agencies that conducted “several inspections” of the 72-year-old building society.

Inspections took place in 2009, 2010, 2011, and June 2012, Snagg said on the opposition-sponsored “New Times” on Nice Radio.

The 2012 examination came seven months before a letter in The Vincentian on Jan. 18 by Ministry of Finance economist Luke Browne, who asked if SVBLA was about to collapse.

Reports suggest that the letter triggered the withdrawal of significant amounts of money from SVBLA, which seemingly prompted an FSA take-over last Friday.

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“There were serious concerns, Linton,” Snagg told opposition senator, Dr. Linton Lewis, a lawyer and accountant, of the inspections.

“But you will appreciate that I am not at liberty to disclose certain information. But there were difficulties that were urgent — urgent and immediate,” Snagg said.

He underscored the experience of the staff of the FSA, the state agency that regulates non-commercial bank financial institutions, which was established in 2011.

“So, in spite of the youthfulness, the FSA is on rock-solid base on which we intend to build. So, it is not that we started something from scratch … so that people should be overly worried about the inexperience of the institution.”

But Lewis noted that the law gives the FSA the option of putting in an investigator, or to seize the operation of a financial institution.

Lewis said that when the operation of an organisation is seized, the operation can be reviewed — including looking for illegality, but, for the most part, ensuring continuity.

“But there is also another power that is given to the Financial Services Authority once it has seized control of an institution, and that is to windup — put into liquidation — the operations of that institution,” Lewis observed.

Leon Snagg, chair of the Financial Services Authority. (Photo:
Leon Snagg, chair of the Financial Services Authority. (Photo:

“Yes, the FSA has that power but you notice we have not exercised that power,” Snagg responded.

Lewis spoke of “perception”, saying, “when an examiner is examining, the issue of winding up is not of any relevance”.

When an investigator goes and gets a report from an institution, “there may well be reasons for seizing the operation,” he further said.

“I can sympathise with the fact that they (the FSA) have only been established administratively from November and therefore, little time may have been available for them to get involved in examination and investigation,” Lewis said.

“But, from the time you seize the operation of the institution, out there, it create a greater air of suspicion, notwithstanding the fact that by going in there something good happened; because, by going in there, the haemorrhage of the institution would have stopped…”

SVBLA is said to have a provision where persons wanting to withdraw their share have to wait three months or waive interest for that period.

Lewis said he understands that the three-month stipulation was not observed and “money was just being taken out willy-nilly”.

“So, going in there was an excellent idea from that perspective. However, there is still the issue of confidence,” he said.

The senator further said people might still apply to withdraw their shares, which will apply at the end of the stipulated three months.

“And if people don’t have confidence and they still make the application, after three months, you end up in significant problem. So, the confidence factor is very important, especially when the Financial Services Act 2011 accords unto that institution (FSA) the power to wind up the place (SVBLA).”

Lewis further said people are asking if things are so bad that SVBLA would be wound up and said that is why a preliminary report is “absolutely necessary, as a matter of expediency”.

Opposition senator, lawyer and accountant, Dr. Linton Lewis. (File photo)
Opposition senator, lawyer and accountant, Dr. Linton Lewis. (File photo)

He further said that when one looks at SVBLA’s financial statement for 2009 and 2011, “there was definitely a need for there to have been an inspection.

“… And I am glad to hear that there was an inspection,” he said in reference to the probes between 2009 and 2012.

“Now that this has come out that there has been examinations, it clearly shows that there must have been serious concerns for there to be seizure,” the senator added.

Snagg said he wanted to assure stakeholders “that the Building and Loan Association is good and competent hands” and that its operations continue.

“… we are getting technical assistance from the World Bank,” he said, adding that an asset management specialist is already working along with the team.

“The take-over exercise has a fact-finding element in it,” he said, adding, “And, without the facts, you cannot make informed decisions.

“So, there is no need for haste to hear from us. We are doing what we are supposed to be doing. We will come to public in due course,” he further said, echoing an FSA statement on Wednesday.

The FSA official told the senator that when they facts are known “you have to come up with a strategy to correct them”.

But Lewis said that since there were investigations, by now facts should be known.

“That’s not all of it. You have to go on the ground at a certain level,” Snagg said.

“In the fullness of time, I trust that we will get it right,” he further said.

He said he was hopeful of an “exit strategy” in “ near future” and that “the FSA does not want to take away ownership of the Building and Loan Association from its owners”

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