NMIRF signs agreement with BoS

The Retirement Fund Board of Directors has finally signed a proposed agreement with the Bank of Saipan, buts its provisions cannot be made public yet pending review of the bank and the court.

“The Fund board has finalized the agreement but with changes. Everything remains confidential at this time,” said Fund administrator Karl T. Reyes.

He said all the board members were expected to sign the revised document last Friday for submission to BoS today. The court has to receive the proposed agreement by June 30.

The Fund, which rejected BoS’ previous proposal early this year, had resumed discussions with the bank following instruction by the court.

The court has given the two parties up to the 30th of this month to come up with an agreement.

“If no agreement is reached within the month, the court will then decide what to do,” said Reyes.

The absence of an agreement with the Fund has prohibited the bank from pursuing its loan services.

The bank earlier asked the court to instruct the CNMI banking commissioner to approve BoS’ loan services, but the banking commissioner had reportedly rejected the request for lack of an agreement with the Fund concerning its deposits.

The Fund had wanted to pull out the entire amount of its deposits, about $5.6 million, from BoS.

Authorities said the bank had offered the Fund a withdrawal scheme similar to the terms of an agreement reached with the Marianas Public Lands Authority.

MPLA, which has the biggest government deposits in the Bank of Saipan at over $8 million, may now withdraw funds from the bank after reaching an agreement with BoS earlier this month.

Bank chairman Paul Calvo reportedly said the agreement allows MPLA limited access to the funds. In addition, BoS will pay MPLA additional monies beginning 2005.

BoS has some $15 million in deposit from the government, composed mainly of MPLA and Fund deposits. The remaining amount pertains to deposits by the Commonwealth Development Authority.

Reyes had said the Fund’s Board of Trustees was keen on transferring money to the Fund’s other investment ventures, including its home loan program, which could yield up to around 9.5 percent in interest compared to the 1 to 1.5 percent interest in the bank.

Reyes said the Fund had previously planned to liquidate its TCDs upon maturity last year but was preempted by the federal indictments that caused the momentary closure of the bank. BoS has since reopened and operated under a court-approved rehabilitation plan.

In late March this year, the bank said 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 reported that total bank deposits had already reached $30 million—about 10 percent of which pertains to new accounts. Cash and liquid investments amount to $13.5 million.

BoS said that it began to operate “profitably” since about October last year.

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.