Short-term (current) liquidity available at the Building & Loan Association (BLA) increased by EC$30 million between Feb. 1, when the Financial Services Authority (FSA) intervened, and June 30.
Short-term liquidity available as of June 30 was EC$40 million, compared to less than EC$10 million at the end of January.
The improved liquidity was due partly to the temporary measures imposed on the withdrawal of assets, Deputy Executive Director of the FSA and Acting Chief Executive Officer of the BLA, Eleanor Astaphan, told BLA members last week.
Astaphan also gave an update on recoveries results since the intervention, saying that cash collections on loans was EC$3.4 million while EC$$3.6 million was collected for non-performing loans (NPLs).
NPLs that were paid off generated EC$1 million, while restructured NPLs contributed a further EC$380,000.
Three property sales were closed for EC$387,000.
The steps have resulted in an EC$8.8 million reduction in NPLs in the books of the BLA.
Further, EC$4.17 million in bids were accepted for 21 properties and the BLA is in the process of closing those deals.
The efforts over the past five months have collected EC$12.97 million. This compares to an average annual recovery of EC$9 million in previous years, Astaphan said.
She added that her team has attempted to do 21 months’ work in five months — a reference to the period of time for which no audited reports of the BLA were submitted.
The Acting CEO further said a commercial bank had a facility at the BLA that was more cost than benefit to the BLA.
She said the facility was 100 per cent collaterised by cash, for which the BLA was receiving “next to nothing in interest”.
The BLA has since given up that facility and invested that money into interest-bearing accounts, Astaphan said.
She said the BLA has revised accounting criteria and procedures and has eliminated inadequate practices, including one that allowed for the accrual of income on non-performing loans — a practice that overstated the assets of the association.
The information technology system has been improved and the BLA has all the hardware needed, including provisions for a 25 per cent increase in capacity.
The BLA has also seen a reduction in losses via better loans collection, better recoveries, and a more “austere administration”.
Astaphan said the administration was more austere in that there are no luxury expenditures featuring on their expenses budget, such as long and luxurious lunches or travel.
Meanwhile, Astaphan said she envisaged that the temporary restriction on withdrawals will be eased incrementally in accordance with the external audit and approval of a general meeting on Aug. 29, at which a board of directors will be elected.
She further said the process of easing will have to depend on and work simultaneously with normalcy in the activity of the association.
The FSA took over management and control of the BLA on Feb. 1, after Luke Browne, an economist at the Ministry of Finance, wrote a letter in a local newspaper on Jan. 18 expressing concerns about its financial health of the BLA.
The letter triggered a run on the 72-year-old building society.