Members of the V.I. Banking Board, including its chairman, Lt. Gov. Gerard Luz James II, expressed their dismay Wednesday over the criticism of their approval of the V.I. Community Bank’s acquisition of Chase Manhattan Bank’s local holdings.
In a press conference called by James, board members said it was VICB and not they who introduced key conditions that the Banking Board incorporated into its approval of the deal last week.
VICB President and Chief Executive Officer Michael Dow had blasted the board’s decision, saying the conditions were anti-business and would derail the deal. Dow couldn’t be reached for comment Wednesday afternoon.
James said the VICB-submitted conditions included a $300,000 annual banking fee and a pledge that the bank wouldn’t seek to renew its Industrial Development Commission tax breaks at the end of 2004. VICB is the only bank in the territory that receives IDC benefits, which include 100 percent breaks on real property taxes, gross receipts and excise taxes and a 90 percent break on corporate income taxes.
"We’re people who resent government intervention very much," said Ernesto Gutierrez, a Banking Board member who, like most of his colleagues, is a business owner. "We feel very comfortable with the approval.
"The deal wasn’t turned down," he emphasized.
Another Banking Board condition calls for governmental approval of 30 percent of VICB’s board of directors, which Dow also criticized last week. But such a condition isn’t unheard of in the banking industry, said Banking Board member Winston Bennett.
"If you don’t have anyone from the outside, you don’t have that perspective," Bennett, a St. John businessman, said. "Outside directors are very normal in the banking industry. They usually head up a bank’s audit committee."
Bennett said the Banking Board was trying to maintain a "level playing field" because the acquisition of Chase would make VICB a local banking giant. He also said the Banking Board’s conditions were never intended to be punitive.
"The IDC certainly never foresaw . . . VICB becoming the largest bank," he said.
Although James said the board is willing to sit down with VICB officials to discuss the board’s approval, he was steadfast in defending what had already been decided over 10 months, with the help of an outside consultant, the U.S. Department of Justice and the Federal Depository Insurance Corp.
"If (I) made an error, I would be the first to come forward and say unequivocally that I was wrong…," he said.
According to VICB’s application to the FDIC, Chase’s deposits were at $357.9 million as of June 30, 1998, making it the second largest bank in the territory behind Banco Popular. Of Chase’s $285.5 million worth of private-sector deposits, $14.4 million are attributable to Chase Trade's FSC accounts, meaning the money is not coming from V.I. residents.
Chase's Eastern Caribbean Regional Banking Group had a total of loans outstanding of $314.8 million as of June 30, 1999, according to the report. Of that sum, $254.7 million were booked to the U.S.V.I. branches.
VICB proposed to buy Chase’s four St. Thomas branches, one branch on St. John and two on St. Croix. Also included is Chase Trade Inc., a management company for foreign sales corporations, which are subsidiaries of U.S. export companies.
Chase’s total staff as of Feb. 23, 1999, is listed in the report as 284 – a breakdown of 210 on St. Thomas, 26 on St. Croix and 10 on St. John.
