DOC renews call for CNMI banks to sign up with FDIC

The CNMI Department of Commerce is renewing efforts to encourage all banking institutions in the Northern Marianas to secure membership with the Federal Deposit Insurance Corporation.

This, after the commerce department fell short in its target to have all banks on the islands secure FDIC membership before the turn of the new millennium.

Commerce Secretary Frank Villanueva said the department’s Banking Division would actively encourage, if not require, licensed banking companies in the CNMI to get FDIC insurance.

Of the nearly 10 licensed banking institutions in the Northern Marianas, only two — Bank of Saipan and City Trust — are without FDIC insurance.

The government’s move to entice companies operating full-banking services to secure membership with the FDIC is being actively pursued by the Office of the Banking Director of the commerce department.

FDIC membership offers up to $100,000 insurance for each account in the event of bank failure or bankruptcy. It provides depositors with security for their money.

While Bank of Saipan has announced that works are already underway for the company’s eventual membership with FDIC, the government is yet to receive words whether City Trust has already come up with a corporate decision on the matter.

Banks have always manifested strength and resiliency against outside factors like economic downfall, but heating competition in the local financial sector is forcing them to draw up plans that would help keep them sound.

Finance experts have see the need to pacify worries of private depositors, thus, the move to aggressively encourage banking institutions operating here to get some form of security, in this case, FDIC membership since this provides a more concrete assurance that the depositors’ money is safe.

BOS is expecting full accreditation with FDIC. The move is expected to boost Bank of Saipan’s competitiveness and resilience, since affiliation with FDIC has been a major consideration among depositors and bank clients when choosing an institution because there is something to fall back on in case a bank goes bankrupt.

While existing law requires that government deposits be fully protected by 110 percent of the bank’s assets, it does not cover private depositors. (AR Fajardo)