Members of the financially troubled Building & Loan Association (BLA) were told last week that while progress has been made over the past five months, liquidation is still very much a possibility.
Chair of the Financial Services Authority (FSA), Leon Snagg, said that two critical issues remain in the hands of members: the withdrawal or non-withdrawal of shares and the recapitalisation of the institution.
Eleanor Astaphan, deputy executive director of the FSA and acting chief executive officer of the BLA, told the meeting that members’ request for withdrawals of their investment from the BLA totalled EC$70 million.
The FSA took over management and control of the BLA on Feb. 1 after a letter written by politician and Ministry of Finance economist, Luke Browne, published in a newspaper on Jan. 18, triggered a run on the 72-year-old building society.
The FSA has placed restrictions on withdrawals from the BLA as it works to restructure the building society, and this has seen short-term (current) liquidity increasing by EC$30 million, to EC$40 million between Feb. 1, and June 30.
The BLA is slated to elect a new executive on Aug. 29, but Snagg said the FSA, as the regulator of non-bank financial institutions, would provide guidance and recommendations after the new board is installed.
But he added that the action of the BLA’s 20,000 members that would determine whether the BLA is returned to full normalcy, exist in some other form or structure, or goes into liquidation.
He told members that he was using the word “liquidation” reluctantly.
“You will determine whether or not the association survives and thrives,” Snagg said.
Snagg was addressing the approximately 200 members of the BLA who attended a town hall meeting in Kingstown to update them on progress over the past five months.
And, Astaphan said if members do not agree to recapitalisation, the BLA could be placed in judicial liquidation.
Under judicial liquidation, a best-case scenario would see the BLA’s liabilities standing at EC$235 million and its assets valued EC$131 million, which could see many members losing their investments.