Building and Loan shareholders need reassurance – Eustace

Opposition Leader Arnhim Eustace yesterday called on the Government to reassure shareholders of the Building and Loan Association,after a Ministry of Finance economist wrote “condemnatory” comments about the institution.{{more}}

“I expect that the government would make a statement to assure people not to get unduly worried. I believe some people are very worried and may have even gone and withdraw money. I think it is time [for] a statement from the government or from the Financial Services Authority,” Eustace said.

Eustace said Luke Browne — whom he defeated in East Kingstown in the 2010 elections — did “a very bad thing” when he wrote a letter asking if Building and Loan was on the verge of collapsing and called for an investigation by the Financial Services Authority (FSA).

The letter was published in The Vincentian newspaper on January 18.

Building and Loan issued a press release on the development on Wednesday, addressing several of the issues Browne raised and said it was prudently managed.

And the FSA — as part of a publication in the newspapers on Friday — said it is “satisfied with this ongoing work” since 2010, when Building and Loan entered into an agreement with the Ministry of Finance, with assistance of the World Bank, “to introduce measures to strengthen the overall condition of the institution”.

Meanwhile, publicist Jerry George told SEARCHLIGHT yesterday that some persons have withdrawn their investments and Building and Loan’s directors are meeting today to discuss a response.

Eustace said the FSA might issue a further statement, but called on the government to reassure the public.

“We need to deal with this matter now. And, if the Financial Services Authority is not dealing with it, then the Minister of Finance, who is the Prime Minister, should make a statement on this matter. “We can’t afford these kinds of additional problems at this time when we are having so many other difficulties in the financial sector of our country,” Eustace said.

(Prime Minister and Minister of Finance Dr Ralph Gonsalves, was, up to press time, overseas on official duties.)

Eustace, who is also an economist and former prime minister and minister of finance, said on his New Democratic Party’s “New Times” on Nice Radio that Browne’s statement was irresponsible.

“… nobody should get up, especially a civil servant working in financial matters, … even without the Financial Services Authority being aware or the government being aware, and make a statement that is condemnatory of any financial institution.

“That is absolute nonsense and irresponsibility. You should wait for the Financial Services Authority. If it is necessary, they’d make a statement,” Eustace said.

“What does he (Browne) know about the details of the Building and Loans operation? And I really look forward to the Building and Loan Association making a statement in the shortest possible time to allay the fears of the public here in St Vincent and the Grenadines.”

He said persons should be careful when commenting on financial institutions “unless we are very clear and understand fully what we are talking about.

“Because, we can cause people to have fears and go and withdraw their money and all these sorts of things,” he said, adding that Browne’s letter “has had some negative effect already.

“I want to say as Leader of Opposition in this country, I am very concerned about this issue and all my colleagues are concerned…

“I don’t want anything to happen with an institution like that. We have just gone through trouble with British American and CLICO; we have gone through trouble with National Commercial Bank — both bank and non-bank financial institutions — and people’s confidence has already been shaken. If we shake their confidence more, they will look to get away from the institutions,” he said.

Eustace said that in addition to deposits at Building and Loan, the institution has mortgages of well over $200 million.

With a membership of more than 20,000, Building and Loan is one of the largest financial institutions in the country, Eustace said.

“So, we have to be very careful with an institution of that size. It is large by our standards. And so many people are involved in one way or the other. “

The FSA regulates non-bank financial institutions here and Eustace said “it is better for them to make a statement than for everybody just running off their mouth without knowing the details of the situation about Building and Loan.

“It has caused a lot of concern to a lot of people. I have been called several times over the weekend as to what is happening in the institution (Building and Loan). And, today, I know people went there again today.

“Some people are taking this matter very seriously, given what has just happened with British American and CLICO and NCB. It’s a very bad thing he has done there. So, I am very concerned about that this morning. I wish the institution well. I hope that problem is rectified very quickly so that people can rest confidently,” Eustace said.

(kentonchance@searchlight.vc)