Heads seeing eye to eye on saving building society

Prime Minister Dr Ralph Gonsalves and Leader of the Opposition Arnhim Eustace yesterday urged shareholders of the St Vincent Building and Loan Association to stick with the institution.{{more}}

The separate encouragements came on the first working day after the Financial Services Authority (FSA) took over the management and control of the 72-year-old building society.

Gonsalves, who is also Minister of Finance, used his chequebook to demonstrate his confidence in Building and Loan two weeks after a member of his staff wrote a letter in The Vincentian newspaper expressing concerns about the management and financial health of the association.

Reports say that some members of Building and Loan withdrew their money in the wake of economist Luke Browne’s January 18 letter.

The prime minister yesterday opened and deposited $20,000 in a special deposit account for his younger daughter, Soleil Gonsalves, and also bought her $1,000 in shares. (See story on Page 3)

He told a press conference yesterday that the $21,000 is his take-home pay for two months and urged citizens to invest.

“We just have to be patient with this and I am saying to persons, keep your money in the Building and Loan, and, if you are outside, do like me and put some money in it and strengthen it,” Gonsalves said,

The prime minister further defended the move by the FSA — the regulator of non-commercial bank financial institutions.

He said his government was not involved in the decision-making process. “I was informed as Minister of Finance,” he said.

“We all know about the tremendous strengths of the Building and Loan Association … and it is for the protection of people — the depositors — that the regulator is saying, ‘Look, we have to go in there and make certain everything is in order. We do what we have to do and get out, leave it let the people who are elected in accordance with the rule run it,’” Gonsalves said.

He was unable to say for how long the FSA will manage Building and Loan.

The director and deputy director of the FSA were unavailable to speak to the media yesterday, an FSA employee said, adding that the state agency was preparing a press release and “possibly [for] a press conference”.

And, Gonsalves further said the FSA has access to the resources it needs.

“… I have absolute confidence that the FSA will function properly. They have the personnel themselves and they have other people they can bring to the table, including the consultants and the government — this government — will provide all necessary support for the maintenance of the strength of that institution, which is vital to the financial system of this country,” Gonsalves said.

SEARCHLIGHT was unsuccessful in repeated attempts yesterday to reach by telephone Robert Bennet, president of the Building and Loan Association.

Meanwhile, Opposition Leader Arnhim Eustace told listeners to his party’s radio programme that while he does not know the details of what informed the FSA’s decision to take over Building and Loan, he would like to see the association survive and prosper.

Eustace said he had heard of persons withdrawing their investments and urged against this.

“I know the climate now is not very good, because people would have lost some confidence because of British American and CLICO,” he said in reference to the conglomerate whose collapse sent the regional financial sector into limbo.

“And St Vincent’s exposure in that regard has been a source of problems for the last few years,” Eustace further said on the New Democratic Party’s “New Times” on Nice Radio.

He said there was a need to enlighten people more about the financial sector so that they “can be more aware and likely to take action”.

“But, I maintain that I want to see the institution survive and prosper. And anything we can do to ensure that happens, I will tend to support that.”

But Eustace also called for full disclosure.

“We have to get to the bottom of the situation and I must have confidence too so that I can say to people, ‘Listen man, things being regularised so don’t move your money,’” Eustace said.

“This is a very serious matter. Thousands of lives are being impacted by what is happening now. People don’t know what to do and they’re looking for guidance and asking a lot of questions,” he further said. (kentonchance@searchlight.vc)