While supportive of the government’s move to set up a Charter Bank, the local Chamber of Commerce board has concerns that have been shared with the House Commerce Committee, which is holding hearings on the administration’s bill for the establishment of the charter bank, to be called the Territorial Bank of American Samoa.

On behalf of the board, Chamber chairman David Robinson this week provided written   testimony on the Chamber’s view and concerns to Rep. Larry Sanitoa, the committee chairman.

In his testimony, Robinson wrote that since Bank of Hawaii’s announcement two years ago to eventually close down its local operations, in the meantime scaling back its services, while ANZ - Guam, American Samoa branch — the other bank in the territory — does not offer the full suite of banking services, the community has suffered, which has led to considerable difficulty in growing the local economy.

He said that it’s quite right that the administration has taken the lead in addressing banking issues affecting the local residents and the economy, in view of the fact that the privately owned Community Bank of American Samoa, is still awaiting federal regulatory approval to open for business.

According to the board chairman, the Chamber sees a number of positives with the administration’s decision to set up a charter bank. For example, the bank will offer a full suite of bank services; enable the economy to further progress; and there will be support from Utah-based Zions Bank as a correspondent bank.

However, there “are a number of issues that are of concern and warrant further evaluation and explanation,” he said.

Gov. Lolo Matalasi Moliga has said that if all goes well as planned — which includes passage of the bill to establish the charter bank and the companion bill to establish within the Treasury Department an Office of Finance, the local regulatory arm of the banking industry — the charter bank should be operational in June this year.

Robinson says the board’s concern is whether the plan for operations in June allows enough time for all the issues to be considered and provides time for a seamless transition from BoH with a well supported 5-year plan.

Another issue raised by Robinson is the $10 million in capital to be raised from the issuance of a bond, through the American Samoa Economic Development Authority. “Who is going to buy the bond and is it a revenue bond not generation obligation?” he asked and noted that another board concern is “how will any operating losses be funded?”

Further, “Would a better option be for the government to stand behind the Community Bank or provide a favorable enrollment to encourage another private bank with financial stability for internally guaranteeing deposits?” (See separate story in today’s edition on the Community Bank’s proposal to the governor.)

As previously reported by Samoa News, officials of ASG told senators last week — who were highly concerned — that the Charter Bank will not be insured by the U.S. Federal Depository Insurance Corporation — but will look at acquiring its own interest for assets and deposits.

(A charter bank is a financial institution whose primary roles are to accept and safeguard monetary deposits from individuals and organizations, and to lend money out. The details vary from country to country, or state to state, but usually a chartered bank in operation has obtained government permission on some level to do business in the banking sector, according to investopedia.com.)

In the board statement to the House committee, Robinson noted that BoH has no intention of reversing its decision to close down local operations, although the Honolulu-based financial institution has made a commitment to remain until a new bank opens here.

“There is... no doubt that for the good of the economy and the community we need a second bank but it would seem advisable to devote more time to evaluating whether the establishment of a government owned Charter Bank is in fact the best option for our banking needs going forward,” he added.

The Charter Bank bill is currently going through hearings in both the Senate and House and there is no indication of when a decision will be made on the measure.