Puerto Rico banking system ‘solid, safe’ from CA, NY bank meltdowns
The Office of the Commissioner of Financial Institutions (OCIF, in Spanish) and the Puerto Rico Bankers Association confirmed in separate statements that the island’s banking system will not be affected by the Federal Deposit Insurance Corp.’s intervention with banks in California and New York over the weekend.
The federal agency shut down Silicon Valley Bank in California and Signature Bank in New York for specific problems each financial institution confronted associated with their capitalization levels to ensure the integrity of their deposits and their clients’ access to them.
“Puerto Rico’s banking system is sound and secure and should not face any repercussions as a result of the FDIC’s intervention,” Financial Institutions Commissioner Natalia Zequeira said in a statement, adding that her office will keep “especially rigorous monitoring in the coming days to reconfirm that this is the case.”
“Banks in Puerto Rico are sufficiently well-capitalized and strategically diversified, so their clients’ deposits are completely safe, and they don’t face any risk due to the problems faced by the two banking entities intervened by the FDIC this weekend in California and NY,” she said.
Bankers Association Executive Vice President Zoimé Álvarez echoed her words, saying: “As we have always reiterated, commercial banks in Puerto Rico are in a solid capital and liquidity position above what is required by regulators, and they continually take measures to guarantee that stability.”
“In addition, they maintain well-diversified deposit portfolios that include both individuals and corporations from all sectors. It is also important to note that local commercial banks do not have exposure to the crypto market,” Álvarez said.
Biden: ‘This must not happen again’
Earlier in the day, President Biden spoke briefly about what’s happening to Silicon Valley Bank and Signature Bank. He credited the FDIC for its “quick action,” which he said has kept the U.S. banking system and deposits safe.
“Last week, when we learned of the problems of the banks and the impact they could have on jobs, some small businesses, and the banking system overall, I instructed my team to act quickly to protect these interests. They have done that,” he said.
“No losses will be — and this is an important point — no losses will be borne by the taxpayers. Let me repeat that: No losses will be borne by the taxpayers. Instead, the money will come from the fees that banks pay into the Deposit Insurance Fund,” he said, adding the management of the intervened banks will be fired.
He also said investors in the banks will not be protected.
“They knowingly took a risk and when the risk didn’t pay off, investors lose their money. That’s how capitalism works,” he said.
“There are important questions of how these banks got into these circumstances in the first place. We must get the full accounting of what happened and why those responsible can be held accountable,” Biden said. “In my administration, no one, in my view – no one is above the law.”
He also said the risk of a similar event must be reduced.
“During the Obama-Biden administration, we put in place tough requirements on banks like Silicon Valley Bank and Signature Bank, including the Dodd-Frank Law, to make sure the crisis we saw in 2008 would not happen again,” he said.
“Unfortunately, the last administration rolled back some of these requirements. I’m going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely that this kind of bank failure will happen again and to protect American jobs and small businesses,” Biden said.
FirstBank clears up info
Wanda Betancourt, senior vice president of Marketing & Corporate Communications at FirstBancorp, said the banks involved in the closings have a “business operating model [that] is very different from that of FirstBank’s and other traditional banks. This type of bank focuses on very specific industries.”
“FirstBank manages a well-diversified deposit portfolio with lower average balances. FirstBank’s customers and deposits are diversified between commercial and individual customers from multiple industries and segments,” she said.
“In addition, FirstBank neither has customers or deposits related to the crypto industry nor manages accounts with digital assets. FirstBank also has a solid capital and liquidity position, significantly above what regulators require,” Betancourt said. “FirstBank has abundant sources of liquidity to prudently manage our business and support our customers in all their banking needs.”
Finally, she said, there have been mentions of banks in the financial press that could be affected by this situation.
“In these lists, First Bancorp of North Carolina is included but is completely unrelated to FirstBank” in Puerto Rico, she said.
