Call to strengthen Building and Loan Association
The Ministry of Finance economist who last week asked if the Building and Loan Association was âon the brink of collapseâ has postponed âfurther newspaper commentaryâ on the financial institution.{{more}}
R. T. Luke V. Browne, who was a Unity Labour Party candidate in the 2010 general election, in a letter in The Vincentian newspaper on Friday, said the Financial Services Authority (FSA) âmust act now to protect thousands of investorsâ.
He expressed concern about âgovernance and financial problemsâ at Building and Loan and said he would this week talk about âtwo directors who set up a private company to which millions of dollars worth of Building and Loan assets are being transferredâ.
But Browne said in a statement on Wednesday that he has put his commentary on hold âpending the outcome of ongoing investigations by the Financial Services Authority and other interested parties.
âPlease be assured that I remain committed to the pursuit of positive changes through all avenues where this corporation is concerned. It is important for the assets of shareholders and clients to be safeguarded,â he said in the statement sent to SEARCHLIGHT (see page 3).
Meanwhile, the FSA, which regulates all non-banking financial institutions here, said in a public information publication in todayâs SEARCHLIGHT, that since 2010, Building and Loan entered an agreement with the Ministry of Finance with assistance of the World Bank âto introduce measures to strengthen the overall condition of the institution.
âThe resulting Plan of Action carries forward in 2013 and with further assistance from the World Bank and close oversight of the FSA. The FSA is satisfied with this ongoing work,â the FSA said in the public information notice.
It was not immediately clear whether the FSAâs statement, which was part of a larger publication (see Page 19), in any way resulted from Browneâs comments.
Further, Building and Loan, in a press release on Wednesday, said its directors, management, and staff âare cognizant of their responsibilities and assure members that their deposits are safeâ.
Building and Loan, in its press release, did not mention Browneâs letter, but seemed to attempt to address some of the issues he raised.
Browne, in his letter, said Building and Loanâs directors and management âcannot reasonably expect to conduct business as usual without adhering to the statutory guidelines, fulfilling their reporting obligations and meeting accountability standardsâ.
He spoke of ârecord keeping practices from the Flintstones ageâ and said Building and Loanâs $50-a-year death benefit plan is âa desperate attempt to raise fundsâ.
He further said there is âreason to question the CEOâs financial and managerial competence…. âThe men and women put in charge have flaunted their responsibilities, and must be held accountable for the millions of dollars that were placed in their care,â Browne said in his letter.
âThis is just the tip of the iceberg. There is a lot more to be said. Building and Loan has directors who have outlived their usefulness…,â Browne said.
But Building and Loan said in its release that the institution âcontinues to growâ and its management âcontinues to work diligently at reducing delinquency to acceptable levels.
âThis task has been very challenging in light of some bad loans in the organization in the past and the effect of the global financial crisis.
âWe have been able to contain the effects of these factors on the Associationâs loan portfolio over the years, and have managed effectively the effects of the write down of our investments in British American Insurance Company Limited.
âThis investment is now fully provided for and any future recovery will be recognised when received. Our investment in CLICO is also substantially provided for. Hence, there are no further write-offs that are likely to impede our efforts going forward,â the release said.
Building and Loan further said its management âcontinues to work closely with the Regulators to ensure compliance and adherence to the various statutory requirements.â
Browne in his letter said the Association was yet to submit its 2011 financial statements to the regulator and had failed to have an annual general meeting in 2012.
This, Browne said, âhas done nothing to boost our confidenceâ.
But Building and Loan said the 2011, unaudited draft financial statements were submitted to the Regulators and 2012 versions âare in the process of completionâ.
It said that due to delay with the full conversion of an updated computer system, the 2011 Audit was not completed in the usual time frame.
This resulted in the inability to host the annual meeting on time for 2011, the release said.
Arrangements are in place for the external auditors to commence the 2011 audit in the first week of February and the 2012 audit would be undertaken immediately after.
The annual meeting for the 2011 and 2012 financial years will be held before the end of June, the release said.
Building and Loan further said its leadership continues to ensure that there is a reasonable spread between its interest rates on loans and deposit rates, in order to ensure that there are adequate funds to finance the Associationâs operating activities.
The release said there has been âno significant declineâ in the value of mortgages held by Building and Loan and revaluations âare constantly done by qualified appraisersâ.
It further said Building and Loan continues to honour its obligations to shareholders, creditors and other stakeholders and continues to look for ways âto improve efficiency and the quality of service to membersâ¦â (kentonchance@searchlight.vc)