A local group of investors is proposing they buy the Territorial Bank of American Samoa (TBAS), the government-owned bank that started operating when Bank of Hawaii departed American Samoa four years ago.
In a letter to Governor Lemanu Mauga dated 26 April, the Community Bank of American Samoa (CBAS), a 10-year old organisation, expressed a strong desire to purchase TBAS and to eventually operate an FDIC insured bank in the territory.”
This is outlined in a press statement issued by the CBAS, which does not presently operate any bank.
“It [the Community Bank of American Samoa] was initially formed more than ten years ago, with the hope that it could purchase Bank of Hawaii’s operation in American Samoa. BankoH decided to close instead of selling, and the government decided to open its own bank, now known as TBAS.
But a government-owned bank is ineligible for participation in the FDIC federal insurance programme that protects bank account owners.
For that reason, among others, government leaders have consistently stated their intention is to eventually privatise TBAS.
However, with the recent announcement by ANZ that they intend to leave American Samoa later this year, the CBAS board of directors believes the time is right for TBAS to be privatised, so that the process of obtaining FDIC insurance can then be commenced, with a view to ultimately protecting local depositors and making loans to local borrowers.
Interim Board Chair Marshall Ashley in the letter to the Bank said the coming departure of ANZ from American Samoa presents a great challenge.
“For the first time in fifty years, American Samoa will have no FDIC-insured bank.
“We strongly believe that American Samoa needs a privately-owned, federally-insured local bank to help develop our economy and serve the myriad needs of the Territory.
“Money kept in off-island accounts is loaned to off-island borrowers, while local residents and companies are unable to borrow money for their needs, thus stifling American Samoa’s economy and its tax revenues.
“The problem is not limited to offshore banks. Both ANZ and Bank of Hawaii had robust local presence, but both banks made corporate decisions to first stop serving the borrowing needs of the American Samoa community, and then to withdraw from the Territory altogether.
“Although the TBAS provides many of the banking services needed in American Samoa, and although the community has benefited from the government’s investment in TBAS when BOH was exiting the territory, TBAS has neither FDIC insurance nor federal oversight.
“Moreover, due to unfortunate losses incurred in its early years, TBAS is now in need of additional capital to support its current level of deposits, lest it be non-compliant with local banking laws (let alone federal standards).”
The statement says as TBAS gains deposits from ANZ’s closure, this problem will become more acute and the disadvantages of not being a private enterprise will grow ever greater.
“For these reasons and more, it has always been the stated goal and policy of the ASG is to eventually privatize TBAS, consistent with America’s long history of private banking and the benefits that accrue therefrom.”
The statement says the CBAS was created by present and past local residents to provide American Samoa with a bank dedicated to serving the Territory as its first and only priority.
The current directors of CBAS are Marshall Ashley (Interim Chair), Dave Haleck, Solip Hong, Peter E. Reid Ill, Leilua Stevenson, Gary Ayre, Brett Butler, and Lewis Wolman.
“All CBAS directors and investors have long-established ties to American Samoa.”