KINGSTOWN, St. Vincent, March 29, IWN — The Eastern Caribbean Central Bank (ECCB) has approved a $15 million loan to the Government for the financially troubled Building and Loan Association (BLA).
Prime Minister Dr. Ralph Gonsalves made the announcement on Monday and gave the first indication that the money might not be enough to stabilise the 72-year-old building society.
Gonsalves said that before the Financial Services Authority (FSA) took over management and control of the BLA on Feb. 1, he had asked that the money be placed on standby ahead of the take-over, in case the money was needed.
“We may well need more than $15 million liquidity support but this is what I had lined up at that point for us to address that matter,” Gonsalves said.
Depositors withdrew $9 million ahead of the take-over, a repeat of a run in 2009.
Gonsalves told reporters that Trevor Braithwaite, deputy governor of the ECCB, informed him by letter that the Monetary Council had approved the loan.
The loan is for three years, with disbursements on a needs basis over six months.
It will attract a 2 per cent interest on a quarterly basis from date of first disbursement.
The principal is to be repaid in quarterly instalments over three years, including a one-year grace period from the date of first disbursement.
Quarterly payments towards the principal will be determined based on the amount disbursed, Gonsalves said.
“This is a matter of great importance to our financial system,” he said.
“… when there are individuals on boards and in management positions — managing financial institutions — and certain things are not done properly in order to protect the system, I have to be utilising money which I could be utilising elsewhere to maintain the stability of the financial system,” he further said.
He said people have raised issue of lawsuit against former managers of the collapsed British American Insurance Company.
“… but I don’t know if anybody has raised similar issues at a domestic level. That’s not for me to raise. That is for those who are keen on raising those issues,” Gonsalves said.