$21,000 investment in Building and Loan a sign of confidence – FSA

The $21,000 Prime Minister Dr Ralph Gonsalves yesterday invested in the St Vincent Building and Loan Association shows his confidence in the financial institution, a Financial Services Authority (FSA) official has said.{{more}}

Gonsalves placed $20,000 in a special deposit and bought $1,000 in Building and Loan shares for his daughter, Soleil Gonsalves, on the first business day after the FSA took over its control and management.

Eleanor Astaphan, deputy executive director of the FSA, speaking shortly after Gonsalves’ deposit, said the authority’s primary concern is to work jointly and collaboratively with Building and Loan’s management.

Astaphan, said the FSA, the regulator of non-bank financial institutions here, deeply appreciated Gonsalves’ investment in Building and Loan. The FSA’s role, she further said, is to “regulate and supervise” the operations of the 72-year-old association.

“We deeply appreciate your time, your commitment and your contribution,” she told the prime minister.

“We are going to ensure that it remains a sustainable institution; that it remains one that continues to be owned, managed by and for the people of St Vincent and the Grenadines,” Astaphan said.

On Friday, the FSA announced in a press release that it had “taken the decision to assume management and control of the Building and Loan Association”.

The FSA further said in the release that it recognized that Building and Loan has been the pride of the community, as a iconic, indigenous financial institution.

“… with this in mind, the FSA assures the public that the Authority has committed all available resources and efforts to safeguard the Association’s financial stability and future sustainable growth,” the release further said.

“We recognize the history of this institution … and we have spoken to a number of Vincentians who have a story to tell and it’s because of the appreciation of the benefits, the history and the potential sustainability of an institution of this nature that the FSA had taken a decision to act in the way that it has, to take control of the management of the institution,” Astaphan said yesterday.

“The FSA had to weigh and consider very carefully the options available to it as a regulator for addressing the issues within the Building and Loan, and it was not an easy decision, but one with which we put careful time and thought and considered what the circumstances would have been for the economy and the people of this country,” she further said.

Meanwhile, the prime minister, who is also the Minister of Finance, said the gesture, which he described as “a drop in the ocean”, shows his faith and confidence in the FSA and Building and Loan.

“Clearly, the best situation always is for the democratic structure within the organization to operate it and run it and so forth, but, as a regulator, if you feel that in the interest of the public, in the interest of the owners of the institution, the members, the depositors, the shareholders, that you need to protect them and you set about doing that protection, and I have confidence in that.

“It is in the interest of the Prime Minister and Minister of Finance to see that this institution and other financial institutions are strong and stable and whatever I can do, I will help as Minister of Finance and Prime Minister.”

In 2009, the prime minister made a similar gesture, when he deposited EC$20,000 at the Bank of Antigua, when it was taken over by the Eastern Caribbean Central Bank.

The FSA intervened at Building and Loan, following the withdrawal of shares and deposits by some persons over the past few weeks.

The withdrawals came on the heels of a January 18 letter in The Vincentian newspaper by Luke Browne, an economist at the Ministry of Finance, who raised concerns about the management and financial health of Building and Loan and asked if it was on the verge of collapse.