SVBLA well on its way back to greatness – CEO

Within the first half of 2014, the St Vincent Building and Loan Association (SVBLA) has recorded results that show significant strides in a return of normalcy to the institution.

In January 2013, the Financial Services Authority (FSA) took over management and control of the SVBLA following an audit which revealed several irregularities within the institution, {{more}}including millions of dollars in non-performing loans and discrepancies relating to financial transactions.

Following the publication of letters from economist Luke Browne, which questioned the financial health of the institution, persons became concerned and a number of members began withdrawing their investments.

IMPROVEMENTS

Chief executive officer, Richard Branch told SEARCHLIGHT on Wednesday that three critical areas of the institution have shown significant improvement.

“The three critical areas are profitability, liquidity and equity and there is significant improvement in all those areas,” Branch said.

In September 2013, a recapitalization plan was approved by members, which saw SVBLA realizing over $39 million in an effort to turn the association around.

According to Branch, since the move to recapitalization occurred, the cash flow into the institution is significant, as well as equity, which moved from a negative to $2.3 million to a current $22.2 million.

Also, the CEO stressed that profitability has seen a turnaround of approximately $11 million within an 11-month period.

“That was brought about by the wisdom of the members when they voted for the recapitalization plan. I think more surprisingly was the profitability, because I don’t think many persons expected the association to return to a profit so quickly and we moved it from a loss of 11.3 million as at the end of January 2013 to a profit by the end of December 2013 of 3 million,” he said.

CHALLENGES

While referring to the previous state of the institution, Branch indicated that there were numerous challenges encountered during the rebuilding process.

The issue of non-performing loans, the information technology system and public confidence were listed as some of the major challenges. However, the CEO, who was appointed in September 2013, assures that strides have been made to rectify these challenges.

“The issue of non-performing loans; I think at the time of intervention, it was about $80 million when the FSA took over, somewhere in that range. We have reduced it substantially. As is now, it’s within the region of 60 million and we are seeing steady progress in the reduction of that,” he said.

“The IT system was a significant challenge, but of course the board and management, in its wisdom, have decided to move to a more modern system that is expected to deliver, has the capacity to produce the necessary reports to effectively manage the association.

“Of course the issue of public confidence was also a challenge, because it was an institution that was in deep waters and restoring confidence was a major challenge but I think from what we’re seeing, the public is showing their confidence in us and their loyalty, which we, of course, greatly appreciate.”

SUPPORT OF MEMBERS

In his interview with SEARCHLIGHT, Branch stressed that the support of members is paramount to the success of the institution.

Although there has been an influx of new members, he noted that it is important for SVBLA to retain its existing members, especially since some were lost previously.

“Bit by bit we are seeing new members coming in. What is important is that we retain our existing members and by and large, our members have remained,” the CEO revealed.

“Some members have left and we are in a process now of rebuilding our membership base and of course we want to encourage our existing members to remain with us because that is what would really strengthen the institution and make it be around for probably beyond my grandchildren.”

Additionally, Branch declared that SVBLA is well on its way “back to greatness,” since the management accounts have reflected that the institution is on target to even better results for the first six months of 2014, when compared to last year’s figures for the same time period.

Despite the results, the CEO noted that it would be misleading to say that SVBLA is back to normal, because there are still some restrictions in terms of the withdrawals and deposits.

“Normalcy in my view is a position where you transact without restrictions. But of course, there are some restrictions that are put in place by the members because the members voted for the recapitalization and of course the recapitalization puts some restrictions on how the access to funds,” he said.

According to Branch, the confidence of members will aid in bringing business back to normal by their support in terms of renewing the length of time on their fixed deposits – something that most members have been doing voluntarily.

“Importantly, what we have been seeing is that a number of people have been rolling voluntarily, which is of course truly encouraging. That is a sign of confidence, that is one of the greatest signs of confidence because a number, a huge number of people have done that, because, of course, it works out better for them too because the higher interest rate is at the longer end, so it’s really encouraging that they have done that, but of course it’s in their interest as well,” he said.

The CEO also took the opportunity to dispel any rumours that SVBLA is not paying interest.

“[That is] certainly not the case. We are paying one of the highest interest rates in the market on deposits and fixed deposits, so when your monies are matured, you are getting the monies plus the interest,” Branch revealed.

In fact, the interest rate for fixed deposits ranges from 3 to 3.5 per cent, he said.

FUTURE PLANS

In an effort to return to its full potential, SVBLA has been reintroducing some of its initiatives.

The scholarship programme was started once again this Wednesday and saw four new recipients receiving funds to support their secondary education.

Suzette Hoyte-Holder, mother of one recipient, declared that she had the opportunity to choose other scholarship programmes, but made the decision to support SVBLA.

“This is a good opportunity to show that they are really growing and moving forward and I want us to be a part of it,” she said.

The issuing of loans has also been reinstated.

“We are certainly back to lending and we brought in place a new loans manager with the necessary expertise to ensure that we have a strong focus on quality and of course, we have re-engineered the whole process of corporate governance to also aid in the administration of loans to ensure that it is done in adherence to best practice with a strong focus of quality,” Branch highlighted.

Branch told SEARCHLIGHT that persons can expect a new set of products in the coming months that are designed to benefit members and meet their dynamic needs.

“The board and management would of course like to express its gratitude to the members for their patience over the last few months, which we know was of trying times. But we firmly believe that the actions taken were absolutely necessary to protect depositors’ funds and we just want to ensure that people remain with us because that is really how we are going to return to greatness; for the members to really remain and give us support,” Branch said.