BoS, MPLA ink deal on funds withdrawal

The Marianas Public Lands Authority, which has the biggest government deposits in the Bank of Saipan, may now withdraw funds from the bank.

The camp of bank chairman Paul Calvo disclosed this development after BoS and the MPLA reached an agreement providing for limited access to the funds.

“The agreement with the bank allows the MPLA to get a substantial amount right away,” said Robert O’Connor, Calvo’s attorney.

He said regular monthly payments would be made to the MPLA beginning this month. “In addition, based on performance indicators, BoS will pay MPLA additional monies beginning 2005.”

The MPLA has close to $9 million in deposits with the bank, the biggest chunk of some $15 million in government monies deposited with the BoS.

Of the total government deposits, some $5.6 million belongs to the Northern Mariana Islands Retirement Fund, while the remaining amount are deposits by the Commonwealth Development Authority.

“Reaching an agreement that is acceptable to both parties was a major condition of the bank’s rehabilitation plan and with this now signed, BoS is one more step closer to achieving total rehabilitation,” O’Connor said.

The bank reopened on May 27, 2003 under a court-approved rehabilitation plan that provided for withdrawal restrictions on pre-receivership accounts.

In late March this year, the bank disclosed that it lifted withdrawal restrictions on old checking accounts, reporting that BoS profited some $500,000 in the previous three months.

During this time, BoS president John Bargfrede reported that total bank deposits had already reached $30 million—about 10 percent of which are new accounts. Bargfrede said cash and liquid investments amount to $13.5 million.

The bank continued implementing withdrawal restrictions on savings and CD accounts, which would last up to 20 months since the bank’s May 2003 reopening pursuant to the rehabilitation plan. Such withdrawals are limited monthly to 5 percent of the account balance.

O’Connor said the bank continues to become more profitable, adding that its condition would further improve if the Superior Court would allow the bank to begin loan services.

The bank asked the court to instruct the CNMI banking commissioner to green-light BoS’ loan services. The banking commissioner had reportedly rejected the bank’s request to revive loan services, on condition that BoS strike a deal first with the Retirement Fund concerning the agency’s deposits.

No such deal, however, has been reached between the bank and the Retirement Fund, which reportedly wants to get the entire amount of its deposits from BoS. O’Connor accused Fund officials of being “unreasonable and uncompromising” in the negotiations.

“[The] Retirement Fund could have had limited access to the money many months ago if they negotiated in good faith with BoS like MPLA did,” O’Connor said.

He added that the bank had offered the Fund a withdrawal scheme similar to the terms of the agreement reached with the MPLA, but the agency rejected it.