An application for restructuring the financially challenged Grenada Building and Loan Association (GBLA) will go before the High Court this month.
The association remains under judicial management after a failed move by the Grenada Cooperative Bank Limited (GCBL) to purchase the financial institution.
In an exclusive with Judicial Manager, W. R. Agostini, he told THE NEW TODAY newspaper that the bid by Co-op Bank to purchase GBLA was rejected on the grounds that its offer of $14 Million was considered inadequate in terms of a fair value price.
Agostini, a long-standing Accountant in the country, believes that the assets of Building & Loan are valued at $26M.
The judicial manager pointed out that members/shareholders of GBLA were informed through a letter issued in December 2013, that Co-op Bank had applied to the High Court seeking to enforce acceptance of their $14 Million offer.
However, the Court heard the arguments in October 2012 and ruled that the Bank had no right to automatically purchase the assets of the Association at the price of $14 million and as such the application was dismissed.
Agostini believes that all is not lost with the locally-owned financial institution since he has since filed an application before the court for a restructuring of the association.
He said that due to Co-op Bank’s intervention, his application was put on hold but now with the conclusion of the GCBL issue, the application for restructuring will now proceed.
The restructuring plan involves Cost reductions and revenue enhancements, employment of a manager with banking experience, review and modernisation of the Building Societies Act under which GBL operates.
This, according to Agostini is necessary in order to allow the association to expand its range of services and be more competitive in the financial market, and obtaining medium term financing for the revitalisation of operations, including the resumption of loans to persons and withdrawals of funds by shareholders and depositors.
He disclosed that he has been holding meetings with parties interested in acquiring GBLA and is encouraged with recent contacts.
Building & Loan was put under Judicial Management in keeping with a series of strict measures that were outlined in 2011.
These include a limit of $500.00 per fortnight on withdrawals from the account of depositors, suspension of all transactions in ordinary and preference shares and a general freeze on new loan applications.
As the Association remains under Judicial-Management with limited services being offered, the only means of cash inflow is that of mortgage payments.
Despite the fact that new mortgage financing remains frozen, mortgage receipts increased to $3.8M in 2012 compared to $3.2M in 2011. In addition, the Collections on mortgages for the current year up to November 2013 amounted to $4.4M.
Subscription and Preference share activities remain frozen until further notice.
Share loans are authorized by the Judicial Manager for special circumstances in cases of medical crisis or other emergencies.
Such payments totaled $218,588.00 for the period January 2011 to November 2013.
Depositors were paid interest of 2% in 2012 on their special deposits, despite the scaled back operations.
Depositors continue to receive limited $500.00 bi-weekly withdrawals with a total of$13.6M disbursed from January 2011 to November 2013. Total deposits as at November 2013 stood at $16.5M.
Despite the economic downturn and restricted operations during the period under review, the association’s cash and cash equivalents increased from $l.OM in December 2011 to $3.2M at the end of November 2013.
GBLA also continues to receive interest and dividends from current investments other than CLICO and BAICO.
The Association has a total of 200 mortgages on record with a total value of EC$16.5M.
Interest and fines collections for the year 2012 totaled $1.5M and from January to November 2013 it totaled $1.4M.
Agostini disclosed that delinquency continues to be a challenge, given the current state of the economy but the staff have remained committed to their customers and have worked along with them to assist in keeping their homes and properties intact.
GBLA was one of many institutions in Grenada and the region that suffered financially following the collapse of the Trinidad-based Clico International Life Insurance (CLICO) and British American Insurance Co. Ltd (BAICO) .
The local financial institution was at the time under the watch of Byron Campbell who has since retired from the association and has recently taken up duties with the Market Access and Rural Enterprise Development Programme (MAREP) as Programme Manager with effect from September 2013.
GBLA reportedly lost EC$16.5M in its dealings with CLICO and BAICO.