Intervention into Building and Loan ‘an act of last resort’ – FSA Chairman

Chairman of the Financial Services Authority (FSA) Leon Snagg has said that the intervention of the FSA into the Building and Loan Association was an act of last resort.{{more}}

In a pre-recorded televised address to the nation last week, Snagg, along with the Executive Director and Deputy Executive Director of the FSA, Sharda Bollers and Eleanor Astaphan, dealt with the Authority’s decision to intercede in the affairs of the Association on February 1 this year.

Snagg said that the decision was a move to stem what he called an “imminent collapse of the Association”, which was as a result of the existing weaknesses, coupled with the panicked response of the general public triggered by “unfavourable press”.

“The FSA would have been irresponsible not to exercise all its powers according to its mandate in order to fulfill its duties”, Snagg noted.

“Since 2009, the association’s operations have been a matter of significant concern both for the Ministry of Finance… as well as the FSA.

“During the last four years the Association evolved to become a highly problematic institution in the financial services sector. Towards the latter part of 2012, it was clear that the financial stability of the Association was severely compromised, and that without firm, immediate corrective actions, its collapse would have been unavoidable.”

Snagg indicated that it was not unusual for an institution to be regulated by an Authority, if the Authority perceives that there are problems as severe as those which were being experienced by the Association.

He said in the broadcast that the problems at the Association could have had a detrimental effect on other financial institutions, had it collapsed; its deposits represented approximately 13 per cent of the GDP of the country and its members are approximately 20 per cent of the population..

The chairman joined with other persons in the public and called on all involved for the support of the Association, as well as the FSA, as every effort is made to bring the Association back to its once symbolic stature.

“We are asking all members, shareholders, depositors and the general public to play their part in this process by helping the Association through this challenging period of its lifespan. The cooperation and support of all concerned parties are critical in this process, where efforts are exclusively focused in attaining financial stability and a sound future for the association.

“We can more effectively do our job if at this time you all share with us our confidence in this long-standing, iconic, indigenous institution, and the process that has been undertaken.

This intervention by the FSA is a temporary arrangement, which allows for stabilization of operations with the objective of handing over a strengthened and sustainable institution back to the shareholders of the Association.

“You can actively help the FSA to help the Association by maintaining confidence in the Association, and not rushing to withdraw monies or, close accounts.”(JJ)