Government to invest six million in St Vincent Building and Loan Association

A six million dollar debt which the St Vincent Building and Loan Association owes this country’s government, will be converted into an investment.{{more}}

Prime Minister Dr Ralph Gonsalves, at a press conference on Tuesday, said that this is just one action that the government has taken to ensure that the troubled institution keeps its doors open, by turning the outstanding interest levy into equity.

“I want to help them clean up their balance sheet; to strengthen their balance sheet, I want to move the six million dollars from a payable, to an investment into the Building and Loan; either if they want to give preference shares, or if I put in as permanent shares.

“I tell them whatever legal form you want me to put it, but I don’t want the government to have any vote or anything involving the Building and Loan.

“So, on the citizens’ behalf, I will have the six million dollars transferred from a debt to us as equity inside of the Association, to strengthen their capital base, but I don’t want us at the government to have any voting rights, nothing at all in relation to it.”

Gonsalves also pointed out that he has written to Sir Dwight Venner, Governor of the East Caribbean Central Bank (ECCB), giving him notice that the government may need at least EC$15 million, from the ECCB’s fiscal reserve tranche, in an effort to “meet any further withdrawal of deposits, and restore liquidity in the Association to normal levels”, if the need arises.

Gonsalves said that he wrote to the Governor following a meeting with members of the Financial Services Authority (FSA) on January 30, two days before the Authority took the reins of the association.

“I was informed that the leadership had taken the decision to intervene under section 8 (of the Financial Services Act of 2011). They provided me with the legal opinion which they had, I read it; they provided me with briefs… but I had been up to speed, because I had been following the matter from the reports since 2009.

“I said to them before you intervene — I didn’t tell them that they must not — because that was not my job… I said I would need 48 hours to get to the Central Bank, the World Bank, the IMF, and to the core committee which advises me to insurance matters….”

He said that he has since been called by the Governor, who informed him that steps had been put in place to facilitate the loan if it becomes necessary.

“I contacted Mr Timothy Antoine… who is the principal advisor to me in my capacity as chairman of this subcommittee of the (Eastern Caribbean Currency Union) monetary council on insurance,” the prime minister added.

“I asked him in the report which he is sending to the monetary council, in addition to the credit unions, to put the Building and Loan of St Vincent and the Grenadines as a preferred institution to obtain support from the monies which are coming from Trinidad, either the second cycle or the third cycle, because the indebtedness of BAICO to Building and Loan is in the region of $12 million, so I want to secure as much of that money to come to them.”

Gonsalves said that he is confident that with the intervention of the FSA, the Building and Loan Association would pull through its current dilemma, and that the steps taken would strengthen the institution’s sustainability.

He called on depositors and the Vincentian public to have confidence in the process.

“That is the message I want to give depositors: don’t move your money, don’t move it. And if you have given notice to move it, leave it. And if you drew out, bring it back!

“We are on top of what the details are, and we have put measures in place….”(JJ)