Colorado orders bank to close

Press, 1 April 1985, Page 32

Colorado orders bank to close

NZPA-Reuter Denver Colorado’s banking commissioner, Mr Richard Doby, ordered a commercial bank, the Fidelity Bank of Denver, to be closed because its capital is inadequate.

In a telephone interview with Reuters, Mr Doby said that the state is meeting potential buyers for the institution, to allow it to reopen by today (United States time). If a new buyer cannot be found, the Federal Deposit Insurance Corporation will become the liquidator. The bank’s SUS2BM (INZ6OM) in deposits are insured by the FDIC, he said. He declined to name potential bidders for the bank except to say that all are Colorado-based institutions. State law did not allow out-of-state banks to own local Institutions, he

said. Mr Doby said that Colorado’s banking commission had ordered the bank’s management to provide an infusion of SUS2.7M (5NZ5.79M) in additional capital by March 28. Banking examiners had determined, during a regular audit in November, that the SUS3SM (SNZBJ7M) in capital the Fidelity had at November 30 was inadequate, he said. In response to a question, Mr Doby said that about SUSI billion (JNZ2.147 billion), about 11 per cent of the state’s banking deposits, are held at state-insured institutions. Colorado’s 133 Industrial banks had been state insured, although about 30 of them have been granted FDIC insurance within the past few months. He added that the state was encouraging the remainder to seek Federal insurance.

Several have been delay-

Ing their applications until the United States Comptroller of the Currency makes a definitive ruling on whether to allow banks to set up “non-bank” banking subsidiaries outside their home states.

Mr Doby said that a few of the state-insured banks in Colorado were owned by out-of-state banks. A run on 71 state-insured thrift institutions in Ohio caused them to be closed for a week after it was learned that one of them, Home State Savings and Loan, would have large losses stemming from its investment with a defunct Florida-based securities firm.

The assets of that firm, ESM Government Securities Inc., are now under control of a court-appointed receiver.

Mr Doby said the Colorado Insurance Guaranty Corp, has assets of JUSIIM.