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

KINGSTOWN, St. Vincent, Feb. 23, IWN — The collapse of the Building & Loan Association was “imminent” and regulators would have been “irresponsible” not to intervene, a Financial Services Authority official says.

Chair of the FSA’s board of directors, Leon Snagg, in a statement to the Agency for Public Information last week, said the FSA’s intervention on Feb. 1 “was a last resort to stem an imminent collapse” of the BLA.

The situation, he said, resulted from “already existing vulnerabilities and the panicked response of the general public, triggered by unfavourable press”.

A letter in The Vincentian newspaper by Luke Browne, an economist at the Ministry of Finance, raised concerns about the management and financial health of the BLA, and asked if it was on the brink of collapse.

Between Jan. 18, when the letter appeared in The Vincentian and Feb. 1, when the FSA intervened, $9 million was withdrawn from the BLA, Sharda Bollers, executive director of the FSA, told the API.

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“The FSA would have been irresponsible not to exercise all its powers, according to its mandate in order to fulfill its duties,” Snagg said.

He said the operation of the BLA has been a matter of significant concern for the Ministry of Finance, the previous regulatory authority, and the FSA.

“During the last four years, the Association evolved to become a highly problematic institution in the financial services sector,” he said.

Toward the latter part of 2012, it was “clear that the financial stability of the institution was severely compromised and without firm, immediate corrective actions, its collapse would have been unavoidable,” Snagg said.

Snagg further said that the intervention of a regulatory body is “not an unusual mechanism of an authority when there are problems as severe as those being experienced by the Association and in particular, when there is the inevitability of collapse of the institution and the resulting contagion risk to the rest of the financial services sector.”

Major problems at an institution like the BLA are considered to have “potential systemic impact,” Snagg said.

He noted that the BLA, which has deposits that represent 13 per cent of the nation’s GDP and membership of 20,000 — one-fifth of the population, is the largest institution supervised by the FSA, which supervises non-bank financial institutions.

Snagg said that while the FSA is a new organisation, it is comprised of qualified person with the relevant background to manage the BLA.

“… the Building & Loan Association is in good and competent hands. We can more effectively do our jobs, if, at this time, you all share with us our confidence in this longstanding, iconic, indigenous institution and the process that has been undertaken,” he said.

He further reiterated that the FSA’s involvement in the BLA “is a temporary arrangement that allows for stabilisation of operation with the objective of handing over a stronger Association to shareholders”.

Snagg further asked for the support of the members, shareholders, and depositors of the BLA and the general public “to play their part in the process of helping the Association through this challenging period of its lifespan.

“We can actively assist the FSA to help the Association by maintaining confidence in the Association and not rushing to withdraw monies or close accounts. The cooperation and support of all concerned parties are critical in this process, where efforts are exclusively focused on attaining financial sustainability and a sound future for the Association,” Snagg said.

He further said “a personal word to the owners of the Building & Loan Association.

“This is a period to stand together in solidarity with each other. If you want to see the Building & Loan Association remain an important pillar in the financial superstructure of St. Vincent and the Grenadines.

“Anything to the contrary is a likely to spell disaster. Disaster not for those who may wish to see the institution fail, but disaster for you, the owners of the Association,” Snagg said.